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1. ESTIMATE YOUR TOTAL COSTS
The education system in Singapore follows high standards of quality and fosters excellence in its students. Offering various choices for pre-school, primary, secondary and tertiary education, it is worth taking a careful consideration at Singapore’s local schools. Not only do they provide a more affordable rate but they also set the bar for all the universities across the nation.
Estimate how much you have to pay for the school fees, living expenses, and other miscellaneous. Do not forget to factor in the inflation rate. For example: If the school fee at NTU or NUS is about S$27,560 last 2010, it will increase to up to S$38,000 by 2030 due to the annual inflation rate of 1.6%. How do you plan to save up for that?
2. LOWER THE COSTS
If the total spending capacity of your household is tight, consider reducing your child’s university expenses. Take up scholarships and other financial aids available at the school. Also, it is important for your child to figure out what he or she really desires to become before venturing off to a course and later shifting to another. An education fund for four years is definitely cheaper than a fund for six.
3. CHOOSE THE FINANCIAL PACKAGE WISELY
There are tons of financial packages tailored to help you save for your child’s tertiary education. Before deciding to commit to one, you must…(a) set your goals first, (b) assess if the package meets your needs, (c) determine how much you can afford, (d) and know how much risk you are willing to take.
After clearing those things up, you must choose between:
a. LIFE INSURANCE PLANS
If you are going to rely on whole life policies, note that only a part of the policy value is guaranteed. The rest of the non-guaranteed value relies on the performance of the insurer’s participating fund. While investment-linked policies do not guarantee the fund values. Said values rely on the investment performance of underlying funds.
b. UNIT TRUSTS AND EXCHANGE TRADED FUNDS (ETF)
The underlying assets that your unit trust or ETF is invested in determines the value of your investment. Given that your investment path is fixed until your child enters tertiary education, you must select a unit trust or ETF that accommodates your timeline and investment objective.
c. BONDS
Bonds, usually regarded as less risky than equities, are primarily fixed income-securities. You shall receive the bond face amount on maturity. However, it comes with the credit default risk of the issuer. A decreasing credit quality of the issuer may cause its bond’s price to decline.
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d. TUITION FEE LOAN SCHEME
Aside from the options above, you can consider loans such as the Tuition Fee Loan Scheme for approved schools. The loan has 0% interest during the period of study.
e. CPF EDUCATION SCHEME
The CPF Education Scheme allows you to borrow from your CPF ordinary account to sustain your child’s local tertiary education costs at approved schools. It is subjected to a withdrawal cap. After graduating, your child will be required to repay the amount withdrawn plus additional interest.
