What many parents may not have realised as their children start in Grade R this year is the total amount it will cost for their child’s education right through to university.
The Old Mutual Savings and Investment Monitor predicts that, by 2033, parents will be required to fork out between R118 600 and R215 500 for one year’s education.
“If your child is starting Grade R this year, the combined cost (from primary school to university) of education is expected to be R950 800 for public schools and R2 207 000 for private,” said an investment marketing actuary with a financial services company, Sinenhlanhla Nzama.
She said this figure included primary school, high school and a three-year university qualification.
What was most alarming, though, according to Nzama, was that only 54 percent of South African parents said they knew what their children’s education would cost, and even fewer (40 percent) were saving for it.
“Our stats showed that people are tightening their belts, and education is one of the main areas where budgets are cut,” Nzama said.
She said that, currently, one year’s education could cost between R23 000 and R42 000, depending on whether the child was at primary school, high school or university, and if it was at a private or a public school.
“Assuming a 10 percent investment growth before fees, you need to save about R460 a month for university tuition – excluding accommodation, books and travelling costs – if your child is born in 2014.”
She added that these monthly savings would need to be increased by 9 percent a year to keep up with education inflation.
National Association of Parents in School Governance secretary-general Mzimkhulu Hlalukana confirmed that, generally, parents did not save for their children’s education, and paid even less attention to their children’s schooling.
“Politically, we push the message that education must be free, so parents don’t save for it. The increasing number of no-fee schools leads to parents seeing education as a free commodity,” he said.
Currently, 60 percent of all pupils in public schools nationally are in no-fee schools.
Hlalukana said that bursary schemes like the National Student Financial Aid Scheme further entrenched the mentality that education was free.
He said people tended to focus on education at the beginning of the year, when schools opened, and at the end of the year, when the matric results were released.
“Parents’ interest in education is seasonal… they don’t see education as their responsibility, but someone else’s. Ignorance and misinformation are a huge problem.
“At schools right now, we have children with poor academic results, but whose parents never come in to enquire about their child’s performance,” he said.
Ways to invest and save for education:
Many people choose unit trusts for long-term investments, as there is a lot of choice and there are funds that specifically focus on beating the rate of inflation by a certain percentage. This is important because education inflation is higher than normal inflation.
These are fixed for a certain period of time, depending on when your child will go to school or university. You can either pay fixed monthly premiums or make a lump-sum payment into the policy.
This is a government initiative that enables parents to save towards an accredited qualification at either a public college or university. You’re paid an annual bonus on the investment, which can be up to 25 percent of the money you save annually up to a maximum of R600 a child.
Source: Old Mutual