Education Fee Planning: A win win deal!

User Written by Joseph Regan on November 16, 2015.

Education Fee Planning: A win win deal!

I was talking to a client the other day about setting up an education fund for his two and four year old and he mentioned that he would like both of them to attend top tier universities in the US. Fair enough, that’s probably the desire of many parents out there.

Using Yale as an example, the cost (room, board, tuition, fees, books, etc.) per student is a jaw dropping 63,250 USD per year! When you include living expenses, extracurricular activities, travel/study abroad, and even a little bit of money to burn on the weekends, this number rises to 85,351 USD per year. Once it’s all said and done, a four year degree at Yale can cost nearly 350,000 dollars, and this outrageous figure isn’t including the fact that school tuition fees rise between 3-5% per year!

In the event your child doesn’t get accepted to Yale, the average cost is still extremely high. In the US, it’s about 20,000 USD per year per student, and around 50,000 if you include extra money for the aforementioned activities/living expenses. And then there’s always the possibility of graduate school, MBA’s and PhD’s after undergrad that will eat into your savings.

Education Costs 2015-16

My client, on the other hand, had a backup plan. “Trey,” he stated, “to be honest I’m not worried about financing my kids’ college because I’m sure they’ll get scholarships! My daughter is a music wiz and my son will for sure be a great [American] football player… he’s got an incredible arm for his age!”

While I’m certainly not questioning the abilities of my client’s children, I will say that assuming your little ones will get a scholarship is not responsible financial planning. What if young Jimmy gets injured, or little Susan gets bored with the violin? It’s most certainly better to have money saved up just in case things don’t go according to plan.

That might sound a bit pessimistic, so let’s look at the glass half full. Let’s say Jimmy is a superstar and gets a full ride, and Susan does the same. Although my client would still have to pay a bit for living expenses, the cost for both of their educations will be significantly cheaper. If this happened, my client would have hundreds of thousands saved up.

“Hundreds of thousands saved up”… Hmm, is that a bad thing?

No not at all! With the right financial advice from a certified expert and by choosing the right product, your investment that you initially started as an education fund doesn’t have to go towards college. You can use it however you like – to finance your retirement, buy a house, travel the world, etc. Or since it was intended for your children you might like to help them out with something that will give them a leg up in life (as the list below shows).

If that day comes and your children need every penny of your investment to provide a world class education, then you’ll be happy knowing that you took the initiative to be a responsible parent. Contrarily, if they don’t need it, then you’ll be just as content knowing that you have a nice savings that can be used for anything you want.

Investing (with the right advice and proper plan) for your children’s education is a win win deal: either they’re going to need it, or you’ll end up using it. I guarantee it will be put to good use by one of you!

If you are in Shanghai and would like to learn more about education fee planning get in touch with me at jregan@infinitysolutions.com for a free, no-obligation consultation.

Joseph Regan

Joseph Regan

Posted on November 16, 2015 in Education fee planning.