Planning for Education FeesGavin Pluck – Regional Director – Guardian Wealth Management
They say children are our future, and providing a solid education to put them in good stead for what lies ahead should certainly be a priority.
As an international expat worker, finding the right education for our children can come with its own set of issues. Different teaching cultures, changing curriculums, learning a new language, can all lead to a lack of consistency and can play their part in a difficult decision making process.
Indeed one of the main reasons cited by many internationals who have decided to repatriate has been their children’s education.
However, putting the above problems aside raising children in an international environment can provide them with a wonderful array of rich experiences and opportunities that would not usually be available in a domestic education.
Finding a good school is undoubtedly the first port of call for expat parents, with a quality education deemed to open many doors for children, including enhanced study and career opportunities, increased extra-curricular activities and more often than not, boosted self-esteem.
Expats living in Switzerland have the choice of either a local school or an international school. While the decision can often be a tough one, with both demonstrating their merits, many expat families prefer to send their child to an international school as they often teach in the same language and adhere to the same curriculum as their home country, which can therefore be useful for those expats who are looking to keep some level of consistency or for those who do not intend to remain in Switzerland permanently. This decision however can prove to be a costly option. In 2013 the cost of a boarding school private education soared above that of the average annual salary in the UK and this is a familiar pattern across the globe.
Swiss boarding schools are ranked as the most expensive in the world, with costs far exceeding that of royal favourite Eton. A boarding school education in Switzerland can set you back by anything from CHF 40,000 to a cool CHF 90,000, with Le Rosey, Chateau de Rosey holding the accolade of the world’s most expensive school, offering not only a world-class education but tennis courts, Jacuzzis, private saunas and a sailing centre.
With school fees fast amounting to one of the single largest costs parents are likely to face – and with no sign of slowing – putting together a strong financial plan really does pay off. Failing to plan ahead could mean a child’s education is disrupted at a crucial point.
Unsurprisingly, expat parents living in Switzerland are facing a maths challenge; when budgeting for their offspring’s education, they need to do a spot of division and multiplication themselves. Firstly, they need to divide education into sections – primary and secondary education and then university fees further down the line. Then they need to multiply that figure by the children they have. Oh – and depending on the age of their children – good old inflation needs to be factored into the equation.
Despite inflation remaining relatively low in Switzerland education costs have increased at an average rate of ten times the average Swiss rate of inflation in recent years and with high demand for places this figure is set to increase.
While primary and secondary education can potentially be paid for from ongoing salaries and employer benefit schemes, University costs can often be a different ball game. It is well documented that if you wish to continue supporting your children beyond their school years a University education now costs far more in real terms than it ever has. These costs can often arrive at that time of a parent’s life when they are enjoying a higher salary and may possibly find themselves in a senior position. One may picture a wonderful time of life when the benefits of a respectable income can be enjoyed. Unfortunately the reality can often be very different and invariably many parents can find themselves living hand to mouth or having to sell assets in order to fund their children’s further education. Borrowing to facilitate these fees is not a favourable option at such a late stage in one’s working career.
Some schools and Universities may offer some form of financial assistance; parents may be given the option of paying fees in advance or applying for a scholarship. Whatever options are available, expats should certainly bear in mind the high costs of education when negotiating their salary or requesting extras in their remuneration packages.
Many of the UN-headed organisations based in Switzerland offer an education grant to internationally recruited staff members which can cover from 50 to 75% of education fees. While this is undoubtedly an attractive benefit, parents must not be lulled into a false sense of security that they don’t need to keep their purse strings tightened.
Extra expenses can really make a dent. While these will vary the list is normally extensive and parents should bear in mind the costs of optional courses, extra-curricular activities, school trips, musical or other tuition and of course books and materials for class.
In reality 75% of education fees will account for less than half the costs of putting a child through University.
With a big financial commitment ahead, life is made much easier if parents start planning from day one. While some parents prefer to pay the term fees out of their income, this can be a daring move and fails to take into account a change in circumstances for the breadwinner.
The first thing to consider is attitude to risk; how much risk are you prepared to take in order to ensure the returns you want? There are many tax efficient and flexible saving plans available that are geared towards funding education fees. Such plans will offer a vehicle to allow investment in global stock markets but allow regular withdrawals when required. Some shudder at the mere mention of the words “stock market” but it can certainly reap its rewards for those willing to take some risk and if investing at regular intervals over the longer term the risks can be vastly reduced.
It’s important to bear in mind how long you will need to hold an investment for as inflation will have an effect on your savings and could eat into your returns. To avoid this, you could structure your saving / investment strategy in appropriate investment time portions, which would mean using equities for one period of time and then moving towards something less volatile further down the line.
Having protection in place to ensure that these fees will continue to be paid in the absence of the main fee-payer also provides invaluable peace of mind and helps to ensure that your child’s education is safe guarded no matter what comes your way.
Due to the increasing number of expats moving to Switzerland, schools are in high demand and parents will be expected to register their child as early as possible. It’s important a lack of financial planning doesn’t get in the way of securing your child’s future. After all, a top education really is priceless.