You may have young kids at present, but we’re sure you’ve put some thought on securing your children’s futures as early as now. That includes saving up so you can send them to top schools to maximize their potential and ensure they have plenty of opportunities career-wise. But how much money do you need to set aside if you have a 3-year-old now and headed to college in 15 years’ time?
A group of financial consultants called Save, Invest then Harvest did the math, considering factors like annual tuition fee hikes and inflation rates, and generated a tuition fee projection for seven universities in the Philippines.
“We have generated another tuition fee projection for seven universities using their approved actual tuition fee increase for Academic Year 2017-2018 and actual tuition fees for [the] academic year 2017 to 2019,” said the group on its Facebook page. “We have gathered the information from CHED’s (Commission on Higher Education) website as well as from the corresponding websites of the given universities.”
Projected tuition fees for universities in the Philippines
We already know sending our kids to college is costly, and these projected fees highlight the need to start saving as early as possible if we want to afford these schools. As Save, Invest then Harvest shares on Facebook, factors that affect the increase in fees, like inflation rates, stock indices, and other commodities, are not fixed and always vary.
“The bottom line is that tuition fees are always on the rise. We should expect that their costs will keep on increasing exponentially. Inevitably, household incomes may not be able to cope [with the increase],” wrote the page.
If you have a 3-year-old child today (2019), and you plan to enroll him or her to a college or university in 2034, here are the projected tuition fees, according to Save, Invest then Harvest.
The amounts certainly put a lump in the throat, but the Facebook page behind the infographics say it does not intend to scare or frighten future parents. It is to encourage you to save right now to prepare your finances. And these are all estimated figures that should be treated as a guide (it can go higher).
With the Free Tuition Law signed by President Rodrigo Duterte in 2018, 112 state universities and colleges, and 78 local universities and colleges nationwide provide full tuition subsidy to students accepted in these institutions. But you want to plan for alternatives in case your child does not get in.
If you want to afford these projected fees by the time your child reaches college, Cristine Tan, a financial adviser from Insular Life suggests setting aside at least Php150,000 yearly. You’ll also need more than just the .5% annual interest growth that banks give you on a regular savings account. Other experts also recommend that you set aside three to six months’ worth of your and your partner’s combined monthly income for savings.
If you’ve managed to save a considerable amount of money for your child’s college fund and can wait for a few years without touching that money, you may want to look at investing. However, Cheska Sarusad, a financial planner, cautions that there’s always a tradeoff with investing. “If you want to invest small, make sure the time is long,” she says.
For example, if you have Php50,000 now and 10 years before your kid goes to college, Ramon Tejero, former program director and head of Retail Equities E-Commerce for Maybank ATRK King Eng Securities Inc., suggests that you “put your money in an equity fund.” An equity fund is also called a stock fund, where your money is put mainly in the stock market, making the risk higher, but the returns greater.
If you have Php100,000 now, and 10 years before your kid goes to college, you can invest in fixed income investments like government bonds, time deposits and corporate bonds, or in mutual funds and a bond fund. The trade-off with these investments is once you place a certain amount of money, the payoff is around after a decade. But the money’s steady growth is best for those with a low-risk appetite, and for those who want the assurance that the money will be there when they need it. (Click here for more tips on how to save for your child’s college fund.)
Raising a child is expensive. However, education is one of the greatest gifts that we can give our child, so it pays to plan now for their college fund and be smarter with the way we handle our money.