Don’t rely on state funding for your child’s tertiary education

As millions of school learners begin preparing for their year-end exams, parents are urged to consider planning now for their children’s tertiary education expenses, rather than relying on state funding to provide this.

This is the viewpoint of Anil Jugmohan, CFA, Investment Analyst at Nedgroup Investments, who believes that many matriculants over the foreseeable future will not be granted the state funding they are relying on for their university education – simply due to the sheer number of scholars currently in need of financial aid.

There is a massive population of young learners who, in five to ten years, may require some kind of financial support in order to further their education. While the government is doing everything possible to increase the funding allocated to education institutions, it is a harsh reality that many parents who are relying on this funding for their child, will be disappointed,” he says.

Jugmohan warns that even students with good academic records could find themselves short of funding as the competition for university funding increases every year. He therefore urges parents and young students alike to make use of the various savings tools available to them to start building up savings that will help them achieve their education goals.

Jugmohan suggests that students and parents create a separate savings or investment account that is dedicated solely to education. “One should never underestimate the power of compounding. Start saving as soon as you possibly can – even if you can only contribute relatively small amounts each month,” he says.

According to Jugmohan -unit trusts such as the Fundisa Fund, are designed specifically to help parents and students save for education. “The major benefit of this fund is that the government rewards investors with a bonus of up to R600 for every year that they contribute to the account. “he says.

For those students who may be closer to leaving school, Jugmohan suggests also applying for a bursary. While the terms and conditions of bursaries vary tremendously, the Bursary Register is a good starting point and will include a full list of bursaries available in a particular field. This should be available at most high schools and universities’ financial aid office.

Jugmohan believes that young South African’s should also be encouraged to pay their own way through university. “By taking a year off to work before studying, or by working part-time while pursuing studies, young South Africans can gain valuable work experience while earning to finance a degree. Saving for this kind of goal requires immense discipline, which is an important life-skill to acquire.”