Graduation.

The most important thing as a parent is our children right? We will do almost anything for our children’s well-being, no matter what the cost. What about when our children reach the early stages of the adult world, is it time for them to fend for themselves? Or as parents, do we still adopt the same attitude. This month’s article is an indication of what our children can expect in the early part of their adult life, and as parents what we can do to ensure the best possible start, or at least prevent the financial burden they can possibly expect.

Wherever you are based in the world, high quality education for your child(ren) is a priority, but it can come at a cost. High quality education is one of the most precious gifts you can give a child and it can keep delivering benefits well into their future.

Research suggests that the burden of a student loan results in 75% of university graduates having to make personal or financial sacrifices to pay off the debt. is this the best start to our children’s professional life?

The modern world we live in, assumes the younger generation will automatically proceed to university for further education. Most job applications ask ‘what form of degree’ do you hold? as opposed to asking if you even hold a degree. Unfortunately, due to the supply and demand of further education, the education sector is fast becoming exposed as a result.

What is the real cost of further education?

Research has shown that in 2015 the top 6 regions in the world to be educated are Canada, UK, Singapore, USA, UAE and Australia. It is also no coincidence that these regions are the most expensive.

A study of Manchester University has shown that the average annual university cost in these regions is $30,000 per year (per child). This is inclusive of tuition fees, student material and general cost of living. The study also has shown that due to the ‘demand’ for further education, the sector is being exposed with a cost inflation rate of 5% per year.

So how much does it actually cost?

The average university course is a 4 year term. Some can be up to 7 years.

If your child was to begin university in 2015:

$30,000 per year x 4 year course = $120,0000

If your child is to begin university in 2025:

Annual inflation of 5%
$30,000 x 4 year course = $120,000 10 years x 5% inflation = 50% $120,000 x 50% inflation = $180,000

The real cost of student debt.

The following statistics are based on a survey conducted on graduates in the United States in 2012.

40% delayed a major purchase such as a car or home

28% put off continuing education

27% moved back to the family home to save money

25% took a job they weren’t enthusiastic about to pay back student loans faster

18% took an extra part time job to supplement income

14% delayed marriage or another committed relationship

The figures speak volumes. The question we need to ask ourselves is simple. Do we want our children to fall into the above percentages? Or would we rather plan today in order to give our children the best possible start to their adult career?

By Aaron Crotty

Aaron is a certified Senior Financial Planner with over seven (7) years experience in the financial industry. He is based in Dubai where he utilises his expertise representing Arlo Associates. To contact Aaron for financial advice, please email him at [email protected] com