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How Much Will Your Child’s University Education Cost In Singapore?

The transition into parenthood is a time that provides parents with immense joy. It is also the start of a long journey that demands great sacrifice.

As a quote goes, “Until you become a parent, you can’t begin to discover your capacity for strength, love and fatigue.”

Of the many heavy responsibilities that comes with parenthood, it includes the financial demands of having a child. A report in 2016 estimated that raising a child in Singapore would cost S$360,000 on average and up to S$1milllion on the high end. A bulk of the amount is attributed to the provision for a child’s tertiary education tuition fees and expenses.

And as the government increases the number of university places to 40% of each cohort in 3 years’ time, everyone wants to get a university degree and everyone wants to plan for their children to attend University.

No doubt, the provision of children’s university education cost is one of parents’ top worries.

Cost of University Education in 2017

The entire cost of university education cost is made up of 2 components; Tuition Fees and Cost of Living.

  1. Tuition fees: This is the amount a student has to pay throughout their candidature. The fees are reviewed by the Universities every year and is charged at the rate prevailing at the time one accepts his/her offer of admission
  2. Cost of living: It includes estimated cost of books, supplies, transportation, meals, personal expenses and optional on-campus accommodation.

Tuition Fees 2009-2017

Cost of Living 2017

Total Cost of University Education in 2017

4 years Non-medicine course for a Singaporean= $41,029+ ($6,000 x 4) = $65,029

As it stands, the total cost of University education costs $65,000 which is almost the cost of an entry level car! If a couple were to save $500 monthly towards their child’s education, it would take them almost 11 years to reach this amount.

Let’s look at how tuition fees have increased over the years and determine the education inflation rate.

Based on our 1st table, we can derive this:

The tuition fees for Permanent Residents (PRs) and foreigners have increased significantly the last 8 years due to the progressive lowering of subsidies given to PRs & foreigners over this period. However, it is unlikely this trend will continue.

Cost of University Education in 2035

We use a case scenario of the following:

  • Tuition fees and Cost of Living increase by an average of 4% per year
  • We include the cost of living (without campus accommodation) for the length of the entire course

The Total Cost of University Education in 2035

Non-medicine course (4 years) for a Singaporean = S$131,737

Setting aside S$130,000 is not a simple affair for most people. If you have intentions to save for your child’s overseas studies in Australia, United Kingdom or the United States of America, the amount you need could be tripled!

Saving for your child’s tertiary education demands you to plan as soon as possible so that you have a longer run way to save and grow your savings. Start early so you have the greatest chance in providing your child with this important opportunity that he/she may need.

To find out how much you need for your child’s education, use this simple calculator here. Click here to learn more about Child’s Education Savings plans and click here to compare education savings plans.

If you have any questions, feel free to contact us at [email protected] . Our non-commission based expert advisers will assist you in solving your needs for your children’s education.

Notes:
Tuition fees have been computed based on the average of the following courses. Non-medicine: NUS (Arts and Social Sciences, Business and Law), NTU (Accountancy and Business and others), SMU (Law & all others). Medicine: NUS

References:

Tuition fees in 2017

  • NUS: http://www.nus.edu.sg/registrar/info/ug/UGTuitionCurrent.pdf
  • NTU: http://admissions.ntu.edu.sg/UndergraduateAdmissions/Pages/tf_15.aspx
  • SMU: https://www.smu.edu.sg/about/financial/tuition-fees
  • Cost of living in 2017: http://www.nus.edu.sg/oam/financialaid/financial-tuition-fees-coaup.html
  • Tuition fees in 2009: http://newshub.nus.edu.sg/news/1003/PDF/FEES-st-19mar-pA1&A4.pdf

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Are You Overpaying for your Life Insurance?

It strikes me hard that for majority people of the people whom I know, they are paying a significant amount from their hard-earned income for their insurance but yet, are still severely underinsured.

For a young couple, it is not unthinkable that they may need $1million of life insurance cover each. This is to provide for their family’s living expenses and children’s education and repayment of outstanding loans if an unexpected event of death occurs. While this figure seems like an enormous amount of coverage to pay for, it need not cost a bomb. You can find out about your life insurance coverage needs using this simple calculator: Click Here

Amount of Premiums We Pay Not equal sign Enough Insurance Coverage for Ourselves

We consider the following example of a Male, Non-Smoker

  • Policy coverage till 65 years old (when children are independent)
  • S$1million Death and Total Permanent Disability Coverage

This is the annual premium from various insurers in Singapore (S$):

Current Age Aviva AXA Life Etiqa Great Eastern HSBC Insurance Manulife NTUC Income Prudential Zurich Life
30 1087 1088 1990 1690 1339 1202 1676 1658 1304
40 1835 1871 3440 2970 2640 2016 2681 2567 2001
50 3379 3379 5330 4760 4494 3701 3888 4268 3549


With information from www.diyinsurance.com.sg and comparefirst. Figures are compiled on 14th September 2015 and includes existing promotions and discounts which are in the knowledge of.

** You are advised to approach a financial advisor for his/her opinion on the features, details and current quotes of the products or if you are considering to purchase, if you should surrender or restructure your existing insurance policies. 

You may wish to compare what you are currently paying for your insurance policy against what is currently offered by the different insurers.

For us to be covered by life insurance for our entire life, it is very expensive with whole life insurance. We will find that we are not able to sufficiently insure ourselves if we use whole life insurance. For a 30 year-old male, $500,000 whole life coverage could cost S$7,000 annually* to be paid annually for 49 years!
Are you overpaying for the amount of insurance coverage you have? Are you sufficiently insured for your loved ones?

Purchasing a term insurance is the only way to provide for sufficient coverage. To understand about the Case of Term Life Insurance: Read here

The Purpose of Insurance

The purpose of insurance is to transfer our risk of a loss to another party in exchange for money. It is important that we adequately transfer our risk (sufficiently insure ourselves) and to keep the cost that we are paying for insurance low. However, there are many misconceptions when it comes to insurance and these are the common ones which I have come across:

  • I need life insurance coverage for my whole life: Our financial obligations tend to decrease as we age due to the fact that, as our dependents grow older, they are dependent on us for a fewer number of years. We should have also built up sufficient assets such that if an unexpected event were to occur, we would have sufficient assets to leave behind for our dependents to live on. There comes a point of time in our life when we do not need any life insurance coverage to provide for our loved ones as they are no longer dependent on us financially.Â
  • Whole life insurance is always better because I may only have to pay for a limited number of years and I can save as well: For insurance companies to craft a policy where it is possible for one to pay only for a limited number of years, it means that a lot more has to be paid for the initial years to compensate for the other remaining years. If we are using whole life insurance for savings, for the low liquidity and returns it provides, we could use many other investment tools which allow us the flexibility to draw our money when we need to without any penalties and possibly achieve greater returns with them.
  • More coverage is always better: This only holds true if we do not have other financial commitments. Accumulating enough funds to retire is not easy to achieve. In a study done by AIA in 2014, 55% of Singaporean respondents were worried they would not be able to save enough as compared to a regional average of 44%. More worryingly, 35% of Singaporean respondents ranked saving for retirement as the most difficult goal to achieve in life. If we decide to spend more on insurance, something else has to be forgone. This could mean prolonging our working years and pushing back our retirement age.

I hope that more of us will understand and spread the word of the purpose of insurance and the importance of insuring ourselves sufficiently. We do not have to overpay when we purchase the right type of insurance and it does not cost us an arm and a leg for us to be adequately insured for our loved ones.