How to beat those tuition fees

Paul Gambles

By Paul Gambles

You may have noticed that household debt in Canada has gone up a little recently.

To be precise, it has increased by some C$1.53 trillion or 250% since the end of 1999; and by C$910 billion or 74% in the last decade alone. Of course, the vast majority of that debt has gone to feed the Canadian housing bubble – mortgage debt has consistently accounted for between 77% and 80% of household debt over the last twenty years.

Student loans, on the other hand, won’t make any screaming headlines – there’s no US-style explosion in borrowings for tuition fees and, at last count in 2016, they represented just 2.1% of Canada’s total household debt. Uncoincidentally, tuition fees at publicly-funded universities have gone up steadily – averaging a 3.3% annual rise over the last five academic years.

While we’re not talking US Ivy League levels of expense, a university education in Canada is far from being free. The national average for tuition fees in publicly-funded universities for the last academic year (2017-18) was C$6,571 for an undergraduate course and C$6,907 for a postgrad. It’s also worth noting that this varies according to the province or territory, with Ontario predictably having the most expensive average fees at C$8,454 per year for an undergraduate course. If a student doesn’t have Canadian citizenship, these figures rocket to an average of C$25,180 for undergraduate and C$16,252 for postgraduate courses.

As well as geography, charges vary according to the type of course, with art and humanities courses tending to be cheaper than engineering and medicine. But fees aren’t the only expense. If a student attends a university far from home, there are the living expenses to cover as well. The rise in student loans between 2012 and 2016 in dollar terms was, in fact, a not-inconsiderable 24%, suggesting that students are increasingly finding it difficult to pay their way with income from a job or parents.

There are, however, some solutions to this. The first is to choose a different country in which to study. MBMG Group’s research department did some analysis a couple of years ago, to find the best value for money in undergraduate courses around the world. Hungary and Greece came out best, as many courses were taught in English and the cost of living (including fees) was very low – around C$11,700 a year. The second-ranked group of countries was Belgium (where, logically, there are also many courses in French in the Brussels-Capital and Walloon regions), Germany and Scotland, which come in around the C$22,000-C$24,000 mark including fees and living expenses for an academic year.

Studying in a country other than Thailand or Canada may not suit everyone and wherever you choose will cost a decent amount of money. That’s why it’s best to prepare early – and by early, I mean even if your children are just starting school so that you can benefit from compound interest.

For example, if you opened a savings account at 2.5% annual interest, with C$500 when your child was 11 years old, paying C$1,065 a month, the total would be C$99,126 (C$90,525 saved + C$8,601 total interest). If, however, you’d started saving when your child was three, paying just C$500 into the account each month, you’d have a final balance of just over C$110,000 (C$90,500 saved and around C$19,500 from compounded interest).

Thus, if you have young children, the best way to avoid the student loans trap is to start saving as soon as possible.

Paul Gambles is the co-founder of MBMG Group

MBMG Group is an advisory firm that assists expatriates and locals within the South-East Asia Region with services ranging from Investment Advisory, Personal Advisory, Tax Advisory, Corporate Advisory, Insurance Services, Accounting & Auditing Services, Legal Services, Estate Planning, and Property Solutions.

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