This is how much you need to send your child to school in South Africa
Given the soaring costs of tertiary education – so widely publicised recently – parents should be prepared to budget for the pre-funding of future school education, as this expenditure continues to erode the monthly income of an increasing number of South African households.
This is according to Andrew Edwards, wealth management consultant at financial advisory firm GTC, who said: “It should be a well-known fact that the cost of education – at public as well as private schools – is one of the biggest line items in modern families’ budgets, as more parents aim to provide their children with the best foundation, before they embark on tertiary education.”
Edwards cited statistics from the Organisation for Economic Co-operation and Development (OECD) which showed that the labour market absorption rate in South Africa was 75.6% for tertiary qualified professionals as compared to 43.3% for the remainder of the population who do not have tertiary qualifications.
“Statistics such as these have been driving parents to ensure their children are armed with a relevant education from early in their lives, and this has led to a significant increase in the demand for quality education.
“However, while the majority of parents tend to focus on saving for post-school education, many are not considering the impact that school funding will have on their financial means.”
He estimated the cost for a year of public primary schooling at approximately R20,000, rising to approximately R60,000 – R80,000 on average per year for a private primary school.
“For a child born in 2018, this means that parents would need approximately R35,000 per year by the time their offspring reaches Grade 1 at a public school, or R180,000 at a private school – considering the current education inflation rate.”
Edwards further estimated the current average annual cost for a public high school at approximately R40,000, rising to R130,000 – R150,000 at a private high school.
“For someone born in 2018 this means that by the time they leave primary school, a year of high school will cost the parents approximately R140,000 at a public school, or R450,000 for an average private school.”
Edwards urged parents to start saving and providing for school education as early as possible, to mitigate the impact on their household budgets.
“As the country’s middle class grows, a quality primary and secondary education is a priority for a growing number of families, and this should be provided for in their financial plans.”
The financial professional said that parents will need capital reserves of approximately R255,000 by the time the child starts at Grade 1 to have the funding for seven years of primary schooling at a public institution.
He further equated this to a requirement for a contractual investment of R2,500 per month with an envisaged return of 10% per year, from when the child is born until they reach school-going age.
For those aspiring to private primary school education, the capital required is indicatively R1,270,000 at Grade 1, requiring a monthly investment of R12,500 from a child’s birth.
Separately and additionally, in order to fund five years of public secondary schooling for a child born in 2018, he calculated that families would require approximately R700,000 by 2031, again assuming a 10% compound return is achieved.
“Those parents who intend sending their 2018 new-borns to a private high school, would need to have saved approximately R2,250,000 by 2031, to fund five years of high school. All these assumptions are based on the prevailing educational inflation remaining at 10%,” Edwards said.
The consultant acknowledged that these figures are for a lump sum that will be drawn from annually to fund the school fees and that no further payments would theoretically be required during the term of the investment. He also conceded that this ideal scenario would almost always be combined with funding fees from prevailing earnings.
“If parents get into a habit of saving diligently towards their children’s education, this cost need not have such a debilitating impact on their disposable income by the time their children are of school-going age, and parents will be in a position to give their children more opportunities,” he said.
Read: Top private and public schools in South Africa: cost vs performance
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