High Cost of Tertiary Education Requires Serious Investment

January 19 - The importance of saving for a child's tertiary education cannot be stressed enough, despite the fact that many South Africans are still feeling the pinch of the recent recession.

It has been estimated that the average child who entered grade one this year will be paying a hefty R160,000 by the time he or she enters university.

Planning financially for these costs needs to begin as soon as possible, so that by the time the child enters higher education, there will be sufficient funds.

According the General Manger of Absa Insurance and Financial Advisors, tertiary education planning is a very important step for every family with children.

"It must form part of every family's budget," said Julian Albien.

Albien said that sufficient funds can be achieved through unit trusts, as well education plans offered by South African insurance companies.

Unit trusts offer families the opportunity to save small amounts of money over a long period of time.

He gave an example of a R200 per month investment for a grade one child. If that trust sees annual returns of 10%, that money will have matured to around R55,000 by 2024.

"Obviously, the greater your monthly contribution, the higher your maturity value would be," notes the general manager.

The government has also joined forces with investment funds to establish the Fundisa Fund which encourages savings through bonuses and other incentives.

At present, it costs R55,277 on average to study for a three year degree in South Africa (taking into account residence fees, books and day to day expenses).

That number is expected to multiply by at least three to meet today's grade one students' needs.