Research by Zurich International Life (ZIL) Middle East shows that UAE resident families are facing education costs of around AED933,945 (US$254,263) throughout the educational years of a child. The figure, which excludes compound interest rates, is based on the total cost of education of two years in pre-school, six years in primary school, six years in secondary school and three years at a British university.
In the UAE, pre, primary and secondary school costs add up to an average of AED528,390 per child. These costs exclude other fees such as the cost of books, trips and uniforms. Additionally, these costs could increase by up to 40% for top-tier schools.
Tertiary education fees differ by country, for example, the average yearly cost of tuition in Australia and Canada is AED55,163, while the US has annual fees averaging AED84,428 per year. UAE-based universities average AED76,492 per year, while in the UK, the costs are an average of AED57,000 annually.
In addition to upfront costs of education, basic living expenses raise costs even further, with accommodation, food, utilities, travel and day-to-day living expenses all adding to the burden on families. These extra costs equate to as much as AED234,551 for one student over a three-year UK course, according to research published in 2015 by the University of Edinburgh.
“A typical family with two children could look at spending as much as AED2 million on education,” said Ms Amrita Sethi, Head of Marketing and Communication for ZIL, Middle East.
While some employers in the UAE contribute to education costs at primary and secondary level, the majority of people are left having to pay these costs themselves, with 70% of parents funding their child’s university education from day-to-day income, according to HSBC’s recent “The Value of Education - Foundations for the Future” report. The report also revealed parents based in the UAE spend the most on children’s higher education compared with other parents globally.
“This is a huge expense that, without proper savings and financial planning, is very difficult to meet and often at the opportunity cost of planning for other important goals, such as retirement,” she said.
HSBC’s report also revealed 64% of parents would be willing to get into debt to fund their children’s university education and 41% of parents think funding their child’s education is more important than contributing to their own retirement.
Ms Sethi said that committed financial planning will help families achieve important saving goals including education for their children.
AED1 = US$0.27