Expats must plan early for children's education

As an expat, pressure can come from a sense of responsibility for helping family members feel at home and thrive in their new country of residence. Where children are concerned, a big part of fitting in centres on schooling and education. After all, school is the place where they will spend the majority of their time and educational attainment will affect their life choices, opportunities and, as many studies have shown, expected levels of lifetime earnings.
That means my children's education is a crucial ongoing consideration - at least until they both graduate from university (which is some time off as they are currently aged 10 and six).
My desire to see my children receive a good education extends beyond what I consider a moral or philosophical obligation and into the less abstract arena of money. That is because one thing common among most expats is that they have to pay for their children's education. For those expats (most in my experience) who do not plan to permanently settle in their country of residence, putting their children into the local school system is often unsuitable for reasons such as language, curriculum or culture.
Additionally, in many places, the children of expats have no right of access to domestic schools even if their parents wanted it. This means some form of fee-paying school is the only option available to many expats.
Although we are lucky that Dubai's schools are good, they can be extremely costly. I have paid fees of more than $13,000 per child for the first year of education at an International Baccalaureate school here in Dubai. While many expats decide to send their children to boarding school overseas, these can also be expensive.
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Therefore, whether you choose a school in Dubai or overseas, it's wise to start thinking about saving for the cost of education.
School versus university
While schooling for expat kids can be expensive, the costs are sometimes covered or offset by employers offering school fee allowances as part of expat relocation packages. However, this is becoming the exception rather than the rule, and such allowances rarely extend to higher education. Accordingly, parents of children who plan to attend university should start examining the costs as soon as possible, because they may be shocked at just how expensive university can be.
There are several reasons for this. The children of expats will usually be considered 'international' students by universities, even in their original home country, if they have not been resident in that country for some time prior to attending university. Being an international student incurs additional costs and may preclude access to grants or loans which may be available to local students.
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As an example of costs, tuition fees for an international student at Cambridge University are almost $25,000 for the 2015 academic year. An eye-watering figure, but it gets worse. Cambridge University estimates that overall expenses would come in at some $49,000 for a year, taking into account accommodation, living and other day-to-day costs. A three-year degree for an international student at Cambridge therefore could cost approximately $147,000.
I would urge you not to despair at that figure and take some comfort from the fact that Cambridge is at the higher end of the spectrum, and expat kids can receive a good university education for a lot less. Nevertheless, the example of Cambridge serves to illustrate the ballpark figures that expat parents of international university students could face.
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Expat children may prefer to stay in their adopted home country for university. In the UAE, for example, there are six local universities that feature in the QS World University Rankings 2014/2015. However, as with primary education, university fees can be very costly here. Taking UAE University as an example, one of the cheapest Masters courses will cost around $13,500.
As a non-resident Indian, sending my children home to India, where there are many good universities, would be a cheaper option because costs for international students, from tuition downwards, are considerably less than in more popular destinations for international students like the US, UK, Singapore and Australia. However, competition for places at the best Indian universities is fierce and only the brightest students will be admitted into the most credible institutes.
Why it's wise to start saving
It's clear that it is important for NRIs to start saving for their children's education as early as possible. By the time my children go to university, I aim to have saved up some 70 per cent of the anticipated costs. Whether I achieve that or not remains to be seen, but having started saving not long after my first child was born, and by putting away a regular monthly amount, I've given myself the greatest chance for the money to grow through investment returns.
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To illustrate this point, a lump sum investment of $60,973 or an annual saving of $4,967 over 18 years, assuming five per cent investment growth after fees, would cover the amount needed for a three year Cambridge University degree by the time a child was 18. While these savings are not small change, careful financial planning can help make investing for your children's education achievable. Remember that inflation will have an impact on your investments and what you are able to purchase in the future, and that education costs could increase significantly over the next 18 years.
It may also be worth considering taking out an insurance policy (life, critical illness, disability) that could cover your child's education costs should you be unable to pay them yourself.
The writer is an international HR consultant at Friends Provident International. Views expressed by her are her own and do not reflect the newspaper's policy.