This is how much you need to send your child to school in South Africa
Given the soaring costs of tertiary education – so widely
publicised recently – parents should be prepared to budget for
the pre-funding of future school education, as this expenditure
continues to erode the monthly income of an increasing number
of South African households.
This is according to Andrew Edwards, wealth management
consultant at financial advisory firm GTC, who said: “It should
be a well-known fact that the cost of education – at public as
well as private schools – is one of the biggest line items in
modern families’ budgets, as more parents aim to provide their
children with the best foundation, before they embark on
tertiary education.”
Edwards cited statistics from the Organisation for Economic
Co-operation and Development (OECD) which showed that the
labour market absorption rate in South Africa was 75.6% for
tertiary qualified professionals as compared to 43.3% for the
remainder of the population who do not have tertiary
qualifications.
“Statistics such as these have been driving parents to ensure
their children are armed with a relevant education from early
in their lives, and this has led to a significant increase in
the demand for quality education.
“However, while the majority of parents tend to focus on saving
for post-school education, many are not considering the impact
that school funding will have on their financial means.”
He estimated the cost for a year of public primary schooling at
approximately R20,000, rising to approximately R60,000
– R80,000 on average per year for a private primary
school.
“For a child born in 2018, this means that parents would need
approximately R35,000 per year by the time their offspring
reaches Grade 1 at a public school, or R180,000 at a private
school – considering the current education inflation rate.”
Edwards further estimated the current average annual cost for a
public high school at approximately R40,000, rising to
R130,000 – R150,000 at a private high school.
“For someone born in 2018 this means that by the time they
leave primary school, a year of high school will cost the
parents approximately R140,000 at a public school, or R450,000
for an average private school.”
Edwards urged parents to start saving and providing for school
education as early as possible, to mitigate the impact on their
household budgets.
“As the country’s middle class grows, a quality primary and
secondary education is a priority for a growing number of
families, and this should be provided for in their financial
plans.”
The financial professional said that parents will need capital
reserves of approximately R255,000 by the time the child starts
at Grade 1 to have the funding for seven years of primary
schooling at a public institution.
He further equated this to a requirement for a contractual
investment of R2,500 per month with an envisaged return of 10%
per year, from when the child is born until they reach
school-going age.
For those aspiring to private primary school education, the
capital required is indicatively R1,270,000 at Grade 1,
requiring a monthly investment of R12,500 from a child’s birth.
Separately and additionally, in order to fund five years of
public secondary schooling for a child born in 2018, he
calculated that families would require approximately R700,000
by 2031, again assuming a 10% compound return is achieved.
“Those parents who intend sending their 2018 new-borns to a
private high school, would need to have saved approximately
R2,250,000 by 2031, to fund five years of high school. All
these assumptions are based on the prevailing educational
inflation remaining at 10%,” Edwards said.
The consultant acknowledged that these figures are for a
lump sum that will be drawn from annually to fund the school
fees and that no further payments would theoretically be
required during the term of the investment. He also conceded
that this ideal scenario would almost always be combined with
funding fees from prevailing earnings.
“If parents get into a habit of saving diligently towards their
children’s education, this cost need not have such a
debilitating impact on their disposable income by the time
their children are of school-going age, and parents will be in
a position to give their children more opportunities,” he said.
Read: Top private and public schools
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