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It may not come as a huge surprise, but recent research carried out by the HSBC Group, confirmed that putting your children (or yourself) through university is an extremely expensive business. Moreover, with increased demand and a worldwide trend of governments reducing subsidies for university education, the cost is set to see further price rises for the foreseeable future.
The US came top of the table for expense, which takes into account both tuition fees and student living costs. According to the research, a US student will spend over $35,000 per year while studying at university. If you’re looking for somewhere less expensive, Germany came bottom of the table with annual expenses of $6,285. However that still adds up to a pretty sizeable debt for a graduate to be saddled with at the end of a 3 or 4 year degree. It is however, peanuts when compared to a graduate in the US, who will embark on their working life having clocked up over $100,000 of debt which could hang like a millstone around their neck for many years. And the situation is often even worse for expat children who may be classified as overseas students, even if they go to study in their native countries, and pay higher tuition fees accordingly.
Table: Average annual Cost of studying abroad for international students
Grants, loans, scholarships and financial aid may be available to contribute towards the cost of a university education but in recent years, public funding for graduates has been scaled back in many countries and this is a trend which looks likely to continue.
The burden of funding a child’s university education therefore falls largely on parents and this can be a huge drain on family resources unless you make provision in to your financial planning. The amounts we are talking about can seem daunting, but the good news is that while life can throw many financial surprises at you, your children’s education is not generally one of them. You know how many years of costs you are looking at, which means that this is one of the easier areas of financial planning to get right.
Starting early is key – the longer you have to save, the more time you have to get your money working for you. It is best to get into the habit of making regular monthly contributions to your savings plan, even if these start small. You can always increase payments over time as your income increases. The key is to benefit as much as possible from the exponential gains of compound interest which increase the longer you invest your money for.
Squirrelling money away in a savings account is absolutely not the best way to get your money working for you. The interest banks are currently offering does not even keep pace with inflation so over time your pot is losing value in real terms. A regular savings plan for university fees invested in a multiple asset portfolio and professionally managed has a far better chance of working for you and producing a real return which will help meet future tertiary education costs.
More planning now means far less pain when your children reach university ages. For assistance in putting an educations savings plan that works for your family get in touch today.
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