Apart from healthcare costs, all parents know that the next big thing that need to ensure that they have sufficient savings for is for their kid’s tertiary education costs. However when I speak to many of my clients, while most feel it is important to have sufficient savings to send their kids to the university, many of them do not have a clear idea how much they really need to plan for. This sparked of the idea for this post, which is to try to find an accurate picture of tertiary education costs and a realistic forecast of what it will be like in the future.
Our first source of data comes from NUS, where they have very kindly estimated education costs and living expenses for various countries.
|Arts / Architect / Law (S$)||Engineering / Science / Computing (S$)||Annual Estimated Accomodation / Living Cost (on-campus, S$)||Total Annual Cost (Tuition Fees & Cost of Living, S$)
|NUS||29,350 – 38,450||37,500 – 37,550||10,386||39,736 – 48,836|
|UK Universities||33,186 – 41,657||45,848 – 55,068||16,463||49,649 – 71,531
|US Universities||56,086 – 66,134||56,086 – 66,134||35,283||91,369 – 101,417
|Australia Universities||34,135 – 45,398||37,851 – 43,866||18,987||53,122 – 64,385|
Tuition/Living Expenses Comparisons by NUSSource: http://www.nus.edu.sg/oam/financialaid/financial-tuition-fees.html
For this estimate, living expenses were broken down with the following estimates:
|On-Campus accomodation (single/double occupancy)*||S$2,625 to S$7,000
|Transportation within Singapore||S$800
|Average cost of books / supplies||S$400
|Total estimated costs excluding accomodation||S$6,000
|Total estimated costs including accomodation||S$10,000
Local Tertiary Education Living Expenseshttp://www.nus.edu.sg/oam/financialaid/financial-tuition-fees-coaup.html
Data from TopUniversities indicate that UK tertiary education costs range from £10,000/yr (~S$17,000) and going up to £35,000/yr (~S$61,000) or more for medical degrees. Estimated cost of living in the UK is about £12,000 (~S$21,000) per year, which comes up to a total of about S$38,000 – $80,000 per year, which is relatively similar to what was projected from the NUS website above. Thus for a four year degree program in the UK, one can expect to pay at least S$160,000. Recent report by TheGuardian indicates that British universities have the highest tuition fees in the world.
For the US, costs are estimated to be about US$60,000 (~S$83,000) per year for the top-tier ivy league universities. University of Michigan, a top public university in US estimates annual costs for students to be about US$59,000 per year. Thus a four year degree program in the US will easily cost at least S$300,000.
To round up this section, here is a summary of what you can expect you need to send your child to a 4 year university degree program.
|No.||Country||Total Cost (S$)|
|1||Singapore||70K - 80K|
|2||USA||320K - 400K|
|3||UK||160K - 320K|
And these figures are for today…
To make things worse, let’s not forget that all these expenses are only valid if your child goes to the university today. It is no secret that education inflation exceeds general inflation, so what kind of increases are we talking about?
School fees for NUS and NTU in a general arts & science degree was about S$6,100 in 2007. It now costs about $8,100 for NUS. That represents a total increase of 33% over the past 10 years, making an average increase of about 3% per year. For the US, data from CollegeBoard indicates that college fees have increased by 50% from 2007 to 2016. That means an average of 5% increase per year. In the UK, tuition fees rose from £3,000 per year in 2006 to £9,000 per year in 2012. While the rise is probably not representative of the future due to the huge subsidies given by the UK government before 2012, we can see that rate of university fees inflation in the UK is probably not going to be lower than that of the US. Thus in general, for purposes of projection, we will use an averal long term education inflation of 3.5% across the world. Please do your own adjustments according to how you see university fees rising in the future.
With a 3.5% long term average education fee inflation, here is the projected total costs for universities from NUS/NTU, US, UK and Australia.
|Universities||Current Total Cost (S$)||Total Cost in 5 years (S$)||Total Cost in 10 years (S$)||Total Cost in 15 years (S$)||Total Cost in 20 years (S$)||Total Cost in 25 years (S$)|
|UK||160,000||190,029.81 ||225,695.80 ||268,056||318,366||378,119
|Australia||53,000||62,947.37 ||74,761.73 ||88,793||105,459||125,252
These figures can look very daunting depending which row and column you are looking at. But do note that these are very rough estimates, and some of our assumptions and breakdown have been detailed above. You should adjust the figures according to your personal needs and lifestyle requirements for your kids.
But the bottom line is this, we all need to start accumulating wealth to give us options when the time comes for your kid to go to the university. If you plan for it, even if you do not eventually need the money, it is still your money to enjoy and do with it as you want and definitely can also be used for your retirement. But if you do not plan for it, it just means that when the time comes, you will have less options. So do take a long hard look and if you would like me to work out a viable strategy for you to work towards some of these numbers, do contact me for a non-obligation consultation.
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