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When is the right time to start saving for university?

Leave it too late and the end result could be a child burdened with thousands of dollars of debt in student loans.

There’s no getting away from the fact that a university education is expensive, and costs can last a long time, especially if more than one child is involved. It’s not just the cost of the tuition fees, but all the other costs that come along with putting a child through university.

Students attending a US private non-profit university in 2014/15 will have to pay on average fees of more than $46,000 for their first year alone (see table 1). Multiply this figure by a four year undergraduate course, and after assuming a small yearly increase of 4%, you could be looking at nearly $200,000.

Table 1: Average fees at US universities, 2014/15

Breakdown of fees (2014/15)
Amount (USD$)
Tuition and other fees $31,231
Room and board $11,188
Books and supplies $1,244
Other expenses (inc transport) $2,609
Total $46,272

Source: www.topuniversities.com

Assuming the costs in table 1 continue to rise by 4% each year, parents of a child born today would have to find more than double this amount by the time their child reaches age 18 (see table 2).

Table 2: Estimated future fees

Student age
Future fees
18 to 19 2033 to 2034 $97,471
19 to 20 2034 to 2035 $101,369
20 to 21 2035 to 2036 $105,423
21 to 22 2036 to 2037 $109,639
Total $413,902

So it’s never too early to start saving as no parent wants to see their children burdened with debt.

The solution – a little education

Quantum is an investment plan that aims to build up a lump sum to meet university fees and associated costs, in return for an affordable monthly premium. In the example shown in table 2, we’d be talking about $1,041 a month, paid over 18 years (total premiums paid $224,856).

The following chart demonstrates the potential build-up of fund values against regular premiums invested to help meet university costs in the later years.

image description

*Withdrawals are taken at the beginning of the year

Of course parents could choose to do nothing until much later, but with some early planning, they could avoid burdening their children with thousands of dollars of debt, in the form of student loans.

Important notes

The figures shown in the above chart have been calculated assuming 7.5% per year growth and is inclusive of all Quantum product charges.

The University fees shown in table 1 make no allowance for any financial assistance that may apply.

Quantum is not available to USA residents. This is an example of the potential costs of sending a child to a university in the USA.