News reports recently revealed that the cost of attending some of South Africa’s most prestigious schools cost in excess of R300 000 per year for tuition and boarding, with annual increases totalling 5% or more. This is almost double the cost of attending some of the country’s top university residences and undergraduate fees. While most South Africans may not be able to send their children to such schools and instead opt for public schools, the top end of the best performing public schools still cost about R60 000 per year, with boarding costs an additional R50 000 per year. This is also not including additional costs like extra-mural activities, uniforms, or anything else.
On top of these rapidly rising costs, the Coronavirus pandemic has added another layer of complexity when it comes to investing for education, with many parents focusing on the short term, rather than on the long term.
“The pandemic has understandably brought more of a focus on the short term for many parents, who have been juggling work, household chores as well as home-schooling, not knowing what the next month entails. Many parents, who typically pay school fees upfront at the beginning of the year to qualify for a discount, may now be considering whether they should continue this strategy, given the uncertainty of school openings and closures thanks to the pandemic,” explains Saleem Sonday, head of group savings at Allan Gray. “Others may have parked their education saving and investing goals in response to other more immediate priorities.”
However, he cautions that applying short-term thinking to investing for education, may have consequences. “Investing for education is a long-term financial goal that should not be impacted by events in the short-term. The pandemic is not going to be around forever and there is hope now that vaccine programmes are getting underway,” says Sonday. “If your goal is to educate your children, then you are going to have to pay your school and or tertiary education fees in one way or another.”
But how can parents then prepare today to afford their children’s primary, secondary and tertiary education fees?
“As always, aligning your goals and timeframes with your product choices is an important component of making sure your decisions are fit for purpose. Consulting with a financial adviser may be the best first step to making the right plan and using the right tools,” recommends Sonday.
Allan Gray’s has also launched a free education series, which is packed with helpful information. Encourage your clients to sign up and share the information with them.
Click here to download the original Allan Gray media release.
