South Africans recognise that education is the key to prosperity and funding their children’s education is a top priority. But do they know how much a tertiary education will cost?
In a recent poll by Sanlam executed by Ova to You, 91% of 1 845 respondents considered education the key to their future success, 77% believed a qualification made people more employable, and 92% believed their children would need more than one qualification to ensure gainful employment.
Survey participants’ belief that a qualification improves employment prospects is backed up by data. Research based on Statistics South Africa data shows that having a matric certificate doesn’t do much to improve work prospects. Only a degree, diploma or certificate really moves the needle.
André Wentzel, Solutions Manager at SPF, says, ‘Our findings reveal that in lower-income households in particular, saving for education is in the top four monthly expenditure priorities. But, inevitably, there’s a shortfall between what people can save and the real cost of education.’
A 2019 Stats SA report based on 2017 data found that just a third of young people aged 18 to 24 were attending educational institutions, with only 11,6% in tertiary education. Over half the youth said they couldn’t afford tuition.
According to data collected by Sanlam, the average university degree costs about R48 000 to R52 000 a year just for tuition. This means parents with a child starting primary school need to save about R20 000 a year in order to save the nearly R600 000 required to cover the tuition cost of an average four-year degree after 12 years. The required annual savings increase to nearly R50 000 if you wait until your child reaches high school.
Sanlam’s research showed 67% of respondents are saving less than R20 000 a year for their children’s education. In the R10 000 to R30 000 a month household income bracket, 63% of people save under R20 000 a year. In the +R30 000 group, it drops to 40%.
André says saving should be as simple as possible. ‘Even saving small amounts adds up. We know South Africans are extremely aware of the benefits of education and how the world of work is changing.
‘So it’s important that they have the tools to set goals and be in control of their savings plans. Sanlam’s Goal Manager enables this by calculating what you need to save for your educational goal and helping you stay on track with your contributions to achieve this.
‘The message needs to be that as a parent, you’re doing an amazing job if you’re managing to save for your child’s future studies. Even if it’s small sums at a time, these add up. The earlier you start saving and the longer you save for, the better.
‘Have a plan in place, use a tool like Goal Manager to stay on track, and consider speaking to a financial planner for support and advice.’