Education costs have remained under the spotlight in South Africa since the beginning of the #FeesMustFall campaign in 2015.
Among other factors, the uncertainty created by this movement has contributed to a growing trend among those who have the means to send their children abroad to study.
According to the 2017 Knight Frank Wealth Report nearly half of the respondents with clients in Africa (47%) strongly agreed that wealthy families are choosing to send their children overseas to get an education, while the global average is 28%.
Stanley Tordiffe, certified financial planner at Old Mutual Private Wealth Management, said that the move by parents to send their children to study abroad is not unusual.
“This is a natural trend as international travel is far cheaper than before, and together with technology, the internet and social media, it is making the world far more integrated and a global village,” he said.
Amid global volatility and change in both the political and financial spheres, Tordiffe said that financial literacy and planning for your child’s education should remain a priority.
“However, like any major financial decision, you need to consider a multitude of factors when deciding whether to send your children overseas for their education.”
What should you consider?
At the end of 2017 Universities South Africa (USAf), the representative body of South Africa’s public universities, granted South African universities an 8% fee increase for 2018.
“While not all universities have adopted the increase, the threat of fee hikes must be considered when calculating the costs involved with higher education,” said Tordiffe.
“The approximate cost for a three-year BCom degree at the University of Cape Town (UCT) is around R169,900 per annum, including tuition, accommodation and other relevant costs.
“UCT is one of the more expensive universities in South Africa, but it is also important to note that you will pay different amounts for different courses.
“An Engineering or Medical Degree, for example, will cost more than other degrees. So, a more expensive degree at one of the less expensive local universities will likely be similar in cost overall,” he said.
Local vs offshore: how much will it cost?
Based on a comparison of three offshore universities, namely the University of Western Australia in Perth, Oxford in England and Harvard in USA, Tordiffe said that the annual average cost for an offshore university per annum including living expense can range between a minimum of R346,216 per annum – for lower end choices – to R1.1 million per annum at Harvard University.
This includes costs for groceries, accommodation – ranging from renting a flat, living in res or communal housing, and entertainment.
While the costs for tuition and accommodation will undoubtedly be the main costs associated with university, studying abroad involves recreating a home away from home for your children, he said.
“Related expenses like accommodation, meals, entertainment, flights and other expenses have to be included. There are many other expenses to consider when sending your child to live overseas whilst studying,” said Tordiffe.
“You also need to consider your child’s living standards as an international student. Will it be at a higher cost or will they have to adjust to a cheaper cost of living?” he added.
How to plan financially
When making the necessary provision, Tordiffe said that possible rand currency fluctuations must be considered and planned for accordingly.
“If the rand had to weaken significantly and you are saving in rands, it would mean you would be short in your savings goal.
“Therefore, it makes sense to have your savings aligned to the nature of the offshore goal by investing offshore and thereby hedging out the currency risk as early as possible in your savings plan,” he said.
He suggested that investors look at their financial plan in relation to their lifestyle and decide how much they are going to allocate to education planning.
“To do this, you need to have a clear understanding of what is important to you and what your desired lifestyle and goals are – you can’t look at any one aspect in isolation,” he said.
“These goals also need to include the likes of your travel, recreation, home, car and retirement goals. By completing the full circle and determining all your lifestyle goals, you will be able to determine the level of investment return that is required for each goal, including your child’s education, based on your current financial circumstances.”
Cost of studying in world’s best student cities
In February, QS released its rankings of the best student cities around the world – based on factors including university rankings, student mix, desirability, employer activity and affordability.
In assessing these rankings it also published the costs of education as well as the cost of living expenses in these cities.
You can find the complete breakdown detailed below.
Individual cost of living calculations have been linked in the table (where possible). Tuition fees based on QS ranked universities.
|Rank||City||Affordability rank||Average annual living expenses||Average international tuition fees|
|1||Montreal||39||$11 300 (R133 203)||$12 200 (R143 812) per year|
|2||Paris||38||$12 800 (R150 885)||$2 900 (R34 185) per year|
|3||London||105||$18 960 (R223 499)||$21 400 (R252 262) per year|
|4||Seoul||74||$13 500 (R159 137)||$6 300 (R74 262) per year|
|5||Melbourne||104||$15 250 (R179 766)||$23 300 (R274 659) per year|
|6||Berlin||16||$10 240 (R120 708)||$0 per year (undergraduate)|
|7||Tokyo||78||$17 300 (R203 931)||$6 600 (R77 800) per year|
|8||Boston||114||$27 666 (R326 125)||$46 800 (R551 676) per year|
|9||Munich||23||$13 300 (R156 779)||$0 per year (undergraduate)|
|10||Vancouver||51||$11 525 (R135 856)||$18 000 (R212 183) per year|