The Solution: Planning Ahead to Cover Higher Education Costs
Written by Dermot Monaghan on August 29, 2017.
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.
In general, there is robust and unambiguous evidence that there are significant benefits associated with the possession of undergraduate degrees. Did you know for example that, according to the OECD, more educated people tend to live longer and feel happier? And of course graduates have an economic earnings and employment advantage over non-graduates.
While it is true that graduate salaries at entry level are falling, graduates are far less likely to be unemployed, and there is always the chance of becoming one of the 20% of graduates who become millionaires!
Earning potential tends to rise along with the quality and prestige of the university with a correlation between the highest earners and the top institutions such as Oxford and Cambridge or Harvard and Yale. As we saw in my previous post, few decent university educations come cheap but you will pay more for prestige.
I also talked briefly last time about solutions to the problems of funding a university education and I’d like to explore that in more detail here. A regular savings plan is an investment plan that aims to build up a lump sum to meet university fees and associated costs in return for an affordable monthly premium. It could mean the difference for your child of a life burdened by debt in which they are unable to save for retirement and a secure financial future.
This table shows an example of the potential build-up of fund values against regular premiums invested to help meet university costs in the later years. In this example, the amount invested is $1,450 a month, paid over 17 years, to bring the total premiums paid to $235,722. That sounds like a huge sum but breaking it down over a 17-year time frame makes it more palatable and also enables it to grow to produce a total fund value of $376,393 which will allow Nicholas and Hannah to graduate debt-free.
However much you can afford to invest per month, planning ahead now is better than choosing to do nothing until later on. It is easy to see from the above that by investing now you could avoid burdening your child with thousands of dollars of debt in the form of student loans and the resulting financial sacrifices that they would have to make later in life.
I have already helped a number of clients in Almaty and Atyrau with savings solutions for their education fee funding. If you have children and are planning for them to go to university, why not contact me for a no-obligation chat? You can contact me by email at email@example.com, call me on +7 (747) 837 0469 or Skype me at dermot.m.monaghan.