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Private education fees top R2 million per child

Discovery launches new education policy, which can be used to fund up to 100% of tertiary education.

Above-inflation increases in education costs and inadequate financial planning coupled with the changing nature of education leave many families struggling to put children through the private education system.

Discovery Life estimates that the present value of private education fees – including creche and tuition at a private school and a public university – is around R2.2 million per child.

Research, undertaken by the insurer shows education costs are being driven by the fact that children now start school much earlier with parents likely to spend around R200 000 on fees prior to primary school.  As a result, parents are required to save R6 880 per month from year one in order to fully fund one child’s education from creche to university compared with R5 722 to fund education from primary school to university. The assumptions, which allow for supplementary expenses, are based on a net household income of R40 000 as well as a savings growth rate and investment return of 10%.

Gareth Friedlander, head of research and development at Discovery Life, explained that supplementary expenses – including devices, uniforms, sports kit and extra lessons – are likely to add at least 50% to education costs. In addition, parents face a “double whammy” of above inflation increases in education as well as stepped increases in fees as children progress through the schooling system.

“The funding for a child starting at creche today would typically be about 18% of your net salary. If your salary increases grow with normal inflation by the time your child is in matric – with nothing changing except the increase in education fees driven by education inflation – it has now risen from 18% to 72% of your net salary.

“It is quite an alarming statistic. [And] it has one of two impacts: either you downgrade the level of education facility that your children end up going to or you try to find some sort of other funding like loans, which have knock-on effects in other areas of financial planning.”

For many, the above-mentioned two options are an unfortunate reality due to inadequate savings for education by parents. Data from a July 2017 industry savings and investment report, cited by the insurer, shows that only 44% of parents and would-be parents are saving for education or have an education policy for their children’s future education.

According to Friedlander, opting to have children later in life doesn’t necessarily help parents fund their children’s education as they would likely have to retire at later ages and use part of their retirement savings to fund education costs.

Seeing an opportunity in the market the insurer has launched a new product, Global Education Protector, will allows for education needs to be protected – in the event of parents succumbing to severe illness, death or disability – and saved simultaneously.

The product options cover either public or private education in South Africa as well as a dollar-based option to fund international studies. According to the insurer, its Vitality shared value model can be used to fund up to 100% of a child’s tertiary education in that 10% is funded upfront while the remainder comprises a reward awarded to parents based on leading a healthy lifestyle as well as their Discovery Vitality status.

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you can apply and get exempted from paying school fees!!! more and more parents are doing this!!! even at top public schools in CT!!!

What are some of the criteria?

More info please.

Even if true are you happy that others pay more than you do? Are you happy to leach off others?

Free lunch, socialism.

Vomit.

How so many South Africans can afford to send their kids to private schools at 200k per annum is beyond me.Education standards there are on a par with decent government schools from the 70’s and 80’s and then it’s off to the UK for university what with standards at even Wits and UCT having gone rapidly south!

Combine household income of 350K, daughter on 3rd year at NWU ( Holidays and weekends she work as waiter for her own $), boy at one of the best primary schools can find. To rich for NSFAS, 1st year paid with personal loan, now work 2 jobs and a paid of car, No DSTV, Clothing accounts, cell phone contracts. Must be a combine family endeavour, no use one save, and the other part gel and pamper R500 a week at the salon. Involve the children, they can be ATM tappers if not involved. Educate the whole family on finances, and let the children earn their keep, they will appreciate much more.

Work as a family towards the goal, and the reality of financial freedom. You don’t need lots of money to be free, just savvy with what you have.

There are other companies who have offered the same for a few years already.

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