Published: August 27, 2020 | Updated: September 16, 2020 | Posted by: Moneymax | Personal Finance
Have you started saving for your child’s future? If so, are you saving enough? To say that the cost of education in the Philippines is expensive is an understatement. Higher Education Institutions in the country increase their tuition and other fees by about 10% year-over-year. However, financially preparing for your kid’s future is doable, if you do it early.
Now, you might be asking: how much do I need to save to provide for my child’s education? The amount you need to build your child’s tuition fund depends on a lot of factors, including the cost of education, how long you’ll save, and everything in between.
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To help you better understand how much you need to save for your child’s education, here are the tuition and fees in some of the top universities in the Philippines:
One of only seven Philippine universities in the 2020 QS World Universities Ranking, Ateneo offers elementary, high school, college, and graduate education. The university offers competitive programs in sciences, liberal arts, law, management, and engineering.
De La Salle University or DLSU offers courses in communication, sciences, engineering, business, and technologies. The university has three terms, with each term costing an average of PHP 70,000.
UP Diliman has over 20,000 students and houses the greatest number of CHED Center of Excellence in the country. Journalism, computer engineering, philosophy, anthropology, and creative writing are just some of the many courses offered by this university.
Dubbed as the oldest university in Asia, UST has nine colleges and offers courses in architecture, physical therapy, journalism, among others. It has over 10 CHED Centers of Excellence.
One of Cebu’s largest universities, University of San Carlos has the most CHED Center of Excellence in the Vis-Min area. It offers programs in education, physics, engineering, and anthropology.
UA&P offers courses in economics, humanities, management, and information technology. The institution also has an international student exchange program, with partner schools in Europe, Latin America, and the Asia Pacific.
Siliman has the greatest number of accredited programs in the country. Founded in 1901, the university has degree programs in information and technology, nursing, biology, and marine science.
Founded in 1901, San Beda has campuses in Manila, Alabang, and Rizal. CHED also granted the institution with university status in 2018. San Beda offers courses in accountancy, marketing, economics, and law.
Mapua University is known for its engineering and architecture programs. Eight of the university’s programs are recognized as a CHED Center of Excellence. Mapua has campuses in Intramuros and Makati, and with four terms per year, with each term costing an averaging of PHP 51,000.
CSB was founded in the 80s as a night school, but today it offers various courses in the fields of arts and design, international studies, and hotel and management. The school has three terms, with each term costing an average of PHP 105,000
Before you compute the amount to save for your child’s education, consider the things that have an impact on the future cost of education.
Do you dream of sending your children to one of the top universities in the Philippines? You should be working harder and saving more because the cost of education in many of the best colleges in the country is expensive.
Your choices are limited if you’re looking for schools that specialize in fields like business, accounting, engineering, medicine, IT, and the arts. If the schools on your shortlist all charge high tuition payments, you must either build a huge tuition fund or keep looking for more affordable choices.
Another option is a state university or college covered by the free tuition law (Republic Act 10931 or the Universal Access to Quality Tertiary Education Act). Qualified students in premier state universities like UP and PUP no longer pay for tuition, miscellaneous fees, and other school fees starting in the academic year 2018-2019.
However, the free tuition law has numerous conditions and restrictions, so you don’t know for sure if your child will qualify for it. Also, it isn’t certain if this law will still be implemented by the time your child enters college.
Once you’ve determined your target college, find out how much the current tuition is in that particular school. You can find the information on the school’s official website or through search engines for Philippine colleges like finduniversity.ph, among others.
Tuition in the Philippines increases by an average of 10% every year—about twice the country’s average inflation rate of 4% to 5%. While the cost of education rises exponentially, household incomes don’t grow as much.
Can you already imagine how costly it will be to fund your child’s education?
Read more: Schools with Highest Tuition in Metro Manila
Your kid’s age today will determine how long you’ll have to save for his or her college tuition. A parent with a newborn has 18 years to prepare for the child’s college education. That’s easier to manage compared to building a tuition fund for a 10-year-old kid or older. The shorter the time left for you to save, the bigger the money you have to set aside per month or year.
Now that you know the factors that affect the cost of education in the country, you can compute the amount you need for securing your child’s education in the future.
To make it simpler, calculate first the cost of education of your child’s first year in college. Use this formula:
Cost of College Education = Current Tuition in Target School x (1.10 ^ Years Until College)
For example, you want your three-year-old to study in UST 15 years from now. With tuition of PHP 110,000, the estimated tuition cost for 2033 is computed this way:
PHP 110,000 x (1.10 ^ 15) = PHP 459,497.30.
That’s for the first year of college alone. You also need to compute for the remaining years in college, taking into account that tuition goes up by 10% every year. To get the total tuition cost, multiply the estimated tuition for the first year (PHP 459,497.30) by 1.10 for every year that your child will in college and then get their sum.
Assuming that your child will complete a four-year course, here’s how much it will cost you for every year in college:
|Year in College||Estimated Total Tuition|
|First Year||PHP 459,497.30|
|Second Year||PHP 505,447.03 (PHP 459,497.30 x 1.10)|
|Third Year||PHP 555,991.73 (PHP 505,447.03 x 1.10)|
|Fourth Year||PHP 611,590.91 (PHP 555,991.73 x 1.10)|
|Total Tuition||PHP 2,132,526.97|
The estimated total cost of education is over PHP 2 million, which will be your target amount to save for your child’s tuition. The actual cost may be higher or lower depending on your target school, the tuition cost, and how long you’ll save up for it.
You can use a Future Value calculator for a quicker computation.
Not every parent can choke up millions of pesos out of their bank accounts to pay for college tuition. However, setting aside tens of thousands for a college fund can be burdensome. Here are other ways you can save for your little one’s college education:
Don’t wait until your kid is five years old before saving for their education. The earlier you start, the longer you have to save for your child’s tuition fund. You can start slowly and allot what you can afford without straining your monthly budget.
Once you’re in a financially better place, you can amp up your savings. The educational landscape in the country changes rapidly, with it comes changes in tuition and fees. So, it’s best to be prepared as early as now.
Allot a portion of your monthly salary for your child’s education. It can be as little or as much as you want, as long as it won’t strain your finances. You can also add more to your kid’s tuition funds, every time you receive a bonus.
Another strategy you can try is aiming for a no-spend month. Apart from buying your essentials and paying off bills and debts, the excess money goes to your child’s education fund. The idea is to spend less money and save more for your kid’s future.
You can also aim for a monthly 10% saving rate. This works if you have a stable income with the same monthly salary. You will have a set amount of savings each month. Ten percent may not be much, but it adds up!
Rather than just saving straight-up, invest your money in an instrument that yields a return of around 8% to 10% or higher. Just a word of caution, though: don’t fall for online investment scams that are rampant these days.
Investing will help bring down your monthly savings while still meeting your tuition fund goal. You can start putting your savings in mutual funds, stocks, VUL insurance, or other investments.
Read more: Investments for Beginners: A Comprehensive Guide
You can get this pre-need plan to save for child’s tuition for five or 18 years. An educational plan isn’t cheap, but it guarantees that you can send your child to a public or private college or university. This type of pre-need plan also ensures that your child’s tuition for the entire stay in college is covered.
You can get loans for your child’s education from private financial institutions or government agencies. You may take out loans from CHED, GSIS, and SSS.
If you are a GSIS or SSS member, you can get an educational assistance loan, with a financial aid of up to PHP 20,000. CHED also offers a student loan program for tertiary education. The amount you can get depends if its’ a short-term or long-term loan. However, you can use the financial aid to buy books, tuition and fees, or other education-related supplies.
You may also turn to private financial institution to fund your kid’s cost of education. Private lenders typically have higher limit on financial aid. Consider getting a personal loan based on your kid’s needs. Of course, you still must ensure you can afford the monthly repayments or you may find yourself racking up debts left and right.
Education comes with a hefty price tag. However, it can help secure your child’s future—and it’s a legacy you’ll want to leave behind for your little one. Start as early as now and find a savings strategy that won’t jeopardize your finances. You can also invest your money to yield some returns. A loan may also help. However, make sure that the repayments won’t cripple you.
With a goal to help Filipinos lead healthier financial lives, Moneymax regularly publishes tips and tricks on personal finance and lifestyle, among many other topics. For more finance-related news and articles, follow Moneymax on Linkedin.