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UAE: Most parents use 40% of salaries to pay kids’ schooling fees, others take loans or dip into savings

Tuition fees are the top concern for parents, followed by living expenses

Around 80 per cent parents in the UAE spend up to 40 per cent of their monthly income to pay tuition fees, while some of them take personal loans and dip into their savings, according to a new survey released on Wednesday.

Conducted by Zurich International Life in partnership with research firm YouGov, the survey findings revealed the average annual cost of education amounts to Dh45,676.

Over one-third – 34 per cent – UAE residents feel “very confident” that they will be in a position to support their children’s further education financially.

The survey, which was conducted in July, covered over 1,500 GCC residents across the UAE, Saudi Arabia, Qatar, and Bahrain.

The survey found that 39 per cent of parents dig deeper into their personal savings and 15 per cent have resorted to taking personal loans to pay tuition fees. Around 18 per cent of Emiratis rely on government aid to pay for their children’s education, with 41 per cent using their personal savings.

While tuition fees are the top concern for most UAE respondents, living expenses followed at 54 per cent, and securing admission to an institute of their choice was an additional concern for 53 per cent.

Rayner Britto, head of distribution at Zurich International Life, says parents are now more aware of the need, not only for saving for their children’s education, but also to ensure that the pot of money they planned to accumulate for securing their children’s future is protected in the case of an unforeseen event.

Britto suggested that parents should set aside some amount every month that will help finance children’s higher education.

“There is no real set amount as every situation would be different. Some of the points to be considered to arrive at the right amount would be the age of your children and the curriculum. Shortlisting a few options in terms of the destination for higher education at the start also helps in assessing costs and inflation rates,” he said.

“Survey has unearthed interesting insights including the fact that a good 62 per cent of parents in the GCC use their monthly income for school-related expenses while the majority of others rely on personal savings or loans,” he added.

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How to save

In addition to take advice from a financial professional, Britto said there are various online tools available that can guide how much parents need to save for their children’s education. “What you need to keep in mind is that you do not need to start with a large amount every month – as long as you start. You have the option to increase your contributions regularly," he told Khaleej Times in an interview on Wednesday.

“With the increasing cost of education and uncertainties of life, parents should seriously consider investing in a structured savings plan to support their child’s education. Always back your education savings plan with life insurance cover, which fully protects you and secures your child’s future,” said Britto.

Sending children abroad

Around 41 per cent of UAE residents said they plan to send their children abroad for higher education to the US, UK, Canada, and India among others. However, the UAE still ranked as the top destination, with 35 per cent of parents across the GCC choosing this as their preferred location.

“43 per cent of the parents surveyed said that a better understanding of education savings plans and their benefits would motivate them to invest in the same,” noted Britto.

While around 12 per cent of UAE parents are hopeful of getting a scholarship.

According to the survey’s findings, 56 per cent of Emirati parents are already investing in their children’s education influenced by their social circles. While Asian and Arab expats come second with 28 per cent. While nearly half – 47 per cent – of UAE residents said they would be more motivated in an education savings plan if they had more awareness of the topic, with only 29 per cent already aware.

Emiratis ranked high with 56 per cent of those surveyed saying that they have already invested in an education savings plan for their children. They were followed closely by Asians and Arab expats with 28 per cent each.