It was after dinner and we were with my brother-in-law Roy. We were enjoying a glass of port when he said “have you and Julie thought about the cost of education, now that you’ve got young Claire?” We said “no we hadn’t” and it was then that he told us the following story.

It seems that one of his colleagues at work hadn’t really considered the costs of a good education. Sure, they knew that it was very important but hadn’t followed things through in terms of the money required. It seems that he found out that the figures at present are as follows:-

Currently, to send a child to an average private school in the U.K. you are looking at £8,000 per annum and for a Boarder it is over twice this amount. When you then think that you may have two or more children and that you have to add inflation to these figures as your children may not be going to a secondary school for another ten years it becomes even more frightening. It seems that the bill for a day pupil based on seven years at secondary school and taking inflation over ten years into account is over £115,000 per child and double that if you want them to board!

I said to Roy that these figures seemed astronomical as inflation is currently quite low in the West, but his colleague had now done the research and inflation in educational spheres is currently running at about seven and a half per cent per annum.

He then went on to compound our agony to point out that the average University course in the U.K. is now four years and currently the costs, if you are U.K. residents, work out at around £8,000 per annum*. Meaning another £32,000 in today’s terms but with seventeen years to go before we would start paying we had to add in some inflation, which meant for just Claire to go through University we would need to have around £110,000 available in seventeen years time and that was in addition to what was required for secondary school!

Just as I thought things couldn’t get any worse, he then reminded us that I was looking to move overseas and although we are all British, if you have not lived in the U.K. for at least a year prior to attending a U.K. University you are classed as an overseas student. The cost of that in today’s terms including accommodation and some “beer” money would be around £20,000* per annum i.e. £80,000 and with inflation added £296,000.

Suffice to say the information brought on a bad attack of heartburn and indigestion that night and gave us lots to think about on our journey home.

Having had it brought home to us we did some research. The fact of the matter is that we realised the following:

• Only those children who leave education with the best qualifications will get the best jobs. Years ago it was quite possible to leave school at sixteen and go through the ‘University of Life’ or ‘Hard Knocks’ and still end up with a first class job. Whilst anything is possible those opportunities are diminishing, as you almost need ‘A’ levels to get a job working on a till in a supermarket! Of course, it hasn’t quite reached that stage but who knows what the future might bring.
• Top students are attaining ten or twelve GCSE’s with ‘A’ or ‘A*’ grades and three or more ‘A’ levels at grade ‘A’. An article in the Sunday Times on the 25th April 2004 carried the headline “If most applicants have 3 A’s at A-level, how do you tell them apart?” The rhetorical reply was “You don’t. You just bin half of them” The gist of the article was that Universities, to stand any chance of making a meaningful decision, would probably just reject out of hand fifty per cent of the applications they received and make a choice from what remained. This would be bad enough but how would you feel if your child did not have 3 As.
• Good jobs leading to good careers are going to be more and more difficult to get. Getting your first job could be the most difficult placement that you will every try to make. The bottom line is if you haven’t got top qualifications you may not even get inside the door.
• What you need to do is to ask yourself is – “Why is a good education important to my children” followed by “What do I specifically mean by a good education?” When you realise how important their future is to you, lastly ask yourself “Whose responsibility is it to do something about it?
• Unfortunately the answer in 99 out of 100 families is “YOU”. With the above figures as a guide line it is easy to see that trying to fund one or even more children through higher education out of income will be extremely painful on the pocket

Conclusion

Excluding the possibility of a large inheritance, robbing a bank or winning the lottery the only reliable and viable means of funding this level of financial commitment is to start saving and start doing it now.

If you would like some advice on how to make the financial provision for the education that you want your children to receive and would like to speak to one of our trained advisors please e-mail deVere & Partners.

*Costs

For UK Residents - University Fees currently £1,150 pa and set to rise to £3,300 pa in 2006
For University Undergraduate Fees around the world for Overseas Residents

Source Hong Kong SAR Education Dept. and Careers & Guidance Section