Save early and wisely for your child's education, say HSBC experts

Kunal Malani, Head of CVM, RBWM, HSBC ME; Karen Bauer, Regional Director, Education USA; and Gifford Nakajima, Regional Head of Wealth Development, RBWM, HSBC ME.

Parents in the UAE have the highest aspirations for their children's education among parents worldwide, yet many are still in the dark about how to put together a viable and sustainable savings plan for their children.
HSBC's 'The Value of Education: Foundations for the Future' survey of 6,241 people across 15 countries and territories, including more than 400 in the UAE, evaluates parents' aspirations for their children's education, and the challenges they face in meeting these ambitions. HSBC's research found that to reach the goals that parents have for their children given today's university costs, they not only have to start putting aside money early, but it is also increasingly important that they save wisely.
Despite the volatility in the global economy over the past decade, one area where prices have continued to rise is higher education. Demand for undergraduate and postgraduate education is greater than ever before, as it is widely seen by parents the world over as a stepping stone to a successful career for their children. HSBC's research affirms this view as it shows that parents in the UAE have and continue to pay the most on average for university globally.
"Parents naturally want the best for their children and hope that a strong education will put them in the best position to lead a prosperous life. Of those in the UAE looking to send their children abroad, 52 per cent would even consider investing in a property in that country. However, the choices in terms of fields of study and the level of education parents hope their children will gain, coupled with the cost of education and accommodation, indicates there is a mismatch in aspirations and financial preparedness," noted Gifford Nakajima, regional head of wealth development, retail banking and wealth management for the Mena region at HSBC.
According to the results of HSBC's survey, 89 per cent of parents in the UAE want their children to pursue an undergraduate degree, while 85 per cent want them to pursue a postgraduate degree.
However, 75 per cent say their child's education makes it difficult to keep up with other financial commitments - those with children in university feel this more acutely than those with children in primary school. These sentiments can be attributed to the constant increase in education costs worldwide. In the US - the most popular higher education destination globally according to the research - average college tuition increased 1,225 per cent between 1978 and 2012, outstripping the approximately 280 per cent increase in the US Consumer Price Index during the same period, according to data from Bloomberg.
HSBC's research shows that parents in the UAE spend around $18,360 annually on college fees, compared to an international average of $7,631 annually. As the country is predominantly an expat market, this is primarily driven by a large proportion of parents here wanting to send their children abroad - the second highest globally to express this sentiment after Indonesia.
The most popular destinations for UAE parents include the USA at 53 per cent, the UK at 51 per cent, and Australia at 28 per cent, which are among the top four most expensive countries for higher education. Meanwhile, medicine at 26 per cent is highlighted as the most popular field of study parents would like their children to pursue, the annual cost of which amounts to $26,558 in the UAE, and up to $44,724 in the USA.
While six in 10 parents say they start making decisions about their children's education before they start primary school, more focus is required on financial planning. HSBC's research shows that 70 per cent end up relying on their daily income to meet these targets, and compounding the potential problem this may raise, nearly 64 per cent would be willing to go into debt to finance their child's studies.
- rohma@khaleejtimes.com