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High education costs challenge UAE parents

Long-term planning needed to meet expenses, says latest report by HSBC

Parents in the UAE are highly ambitious when it comes to the education of their children — with a prestigious university degree being highly valued — experts at HSBC have revealed.

HSBC’s report ‘The Value of Education: Springboard for success’ noted that with the increasing cost of higher education around the world, a vast majority (67 per cent) of parents in the country are not adequately prepared to fund the high aspirations they have for their children’s education.

The report revealed the total price of an international university education in 16 countries across the world by examining the average cost of living and university fees, as well as the countries perceived to offer the highest quality of education, according to parents in the UAE. The report also shows that of the top five countries rated the highest in terms of the quality of education, three are among the most expensive; highlighting the need for parents to have a long-term plan in place if they have high ambitions for their children.

Given the UAE’s high expatriate population, it is not surprising that nearly two-thirds of parents here (65 per cent) are considering sending their children for a better university education abroad, and have varying views on which country provides the best quality of education. The UK and the US are jointly rated the highest, with 60 per cent of people ranking both countries for having the best universities, followed by Canada (37 per cent).

A ‘daunting’ process

Andy Ripley, head of retail banking and wealth management, HSBC UAE, said: “Even though we see that four out of five parents (82 per cent) believe their children’s education is the best investment they can make, less than a third (31 per cent) are able to allocate their funds towards this goal and over half (56 per cent) find this a daunting process.”

HSBC’s research shows that the annual cost of sending a child to study abroad, including university fees and the cost of living, is $36,564 in the US and $35,045 in the UK, which are among the top two most expensive destinations in the world. Even in the UAE, which is rated third best globally by the UAE parents in terms of its educational quality, the total cost of an international university education is $30,472, making it the sixth most costly surveyed.

Despite these high costs, and parents here being among the most ambitious globally — with nearly nine out of 10 parents (86 per cent) desiring their children to study to a post-graduate level — the vast majority are alarmingly unprepared to support these aspirations. Two-thirds (67 per cent) wish they had begun saving earlier, while virtually all (99 per cent) fund their children’s education fully or partially through their current income.

Parent-speak

N. Menezes, whose son Nitin is majoring in Business and Finance at the American University of Sharjah (AUS) talked to Khaleej Times about his decision to enrol his son in a university in the UAE.

“Initially, we budgeted between $30,000 to $40,000 last year for his college, but when we started looking at colleges, the prices had gone up dramatically to $55,000 and $60,000. AUS offered a much better choice, costing around $23,000, and there are a host of other benefits. With the university being one of the best in the region, the job placement rates we’ve read about have been very high, especially in the country,” he explained.

“We did not use a particular education savings plan; instead we used a life insurance plan. So for the first year we had to save up, but with it maturing in 2015, 2016 and 2017, this will help us be financially prepared for the remainder of Nitin’s college years. In addition to the potential for jobs after graduation, with Nitin here, we can monitor him closely and support him as needed. We may consider sending him abroad for his master’s programme.”

Another parent, M. Mishra, whose son Kushan is studying at Bentley University in Boston, said the quality of education, the broad range of courses, and potential job opportunities that an education abroad opens up, were some of the reasons why she wanted to send her son abroad. “We do not have a specific savings plan for his education, but are able to use a mix of our investments and income to pay for his university expenses. He is working quite hard, so we hope that this will work out in the end,” she said.

When asked if it was worth it to send Kushan abroad for his university studies, Mishra said: “I think this will depend on (the situation) once he graduates, which is when we will be able to assess the value of the international degree. In the meantime, it is still worth the experience of living in a new environment and learning to become independent.”

rohma@khaleejtimes.com