The Real Cost Of Education (2021)

Educating our children can cost a lot. Being a parent myself, I want to give the best for my child. And by giving the best for my child means that providing her with the financial means for her education and to be able to pursue her dreams and aspirations.

While school fees make up most of the total costs of our children's education, there are actually other costs that might not be as obvious. If you aren’t already, you should also be aware that educational costs continue to increase annually in Singapore and other parts of the world.

School And University Fees

Let us first assess the school fees, which make up most of your total expenditure on your children's education.

Good thing for us Singaporeans, the costs are kept low especially at the start since primary school fees are completely absorbed by the government.

For those in secondary school, it’s at a nominal $5 per month.

Indeed, the basic costs from primary school through to the O Levels, after adding in the miscellaneous cost, the total is just about $2,000+.

The real struggle to cope financially is when your children enter tertiary education and university.

The educational journey for our kids is pretty much set out for them throughout primary and secondary school and they only have to make the big decision that will have a significant impact on their education journey - to pursue GCE A Levels or go for a diploma at a polytechnic?

Pursuing A Levels at a local JC costs less than going to a polytechnic, costing a total of about $200+ a year - base school fees are $6 and miscellaneous fees are about $13.50 which adds up to $19.50 per month.

Based on that, the cost of pursuing A Levels in JC is quite affordable for most.

However, polytechnic course fees are much more expensive. It is the cheapest for Singapore citizens, and even then, it’s $2,900 per year after subsidies and excluding supplementary fees.

There are additional fees ranging about $80-$100 to cover things like facilities, insurance and examination costs.

The next major decision to be made after JC or Polytechnic will be university.

Getting a place in a local university is something that is highly sought after for many Singaporeans. About 1 in 3 children of each academic cohort make it to a local university as of 2017.

Compared to private or non-local universities with school fees that can exceed $500,000, local universities cost a lot less and you have the option of paying with your CPF money.

Despite this, the expenses incurred in university are significantly higher than back in secondary school or JC where school fees are heavily subsidised and kept low. Even with the MOE Tuition Grant, local university tuition fees can run into tens of thousands of dollars each year.

Here’s a list of the breakdown of the annual university school fees for 2021:

For overseas universities, here’s the comparison and estimated cost:

Tuition And Enrichment Classes

Though education in Singapore is already of impeccable standards and is lauded globally, many parents still send their children to courses outside of school for enrichment and supplementary purposes, believing this would give their kids an advantage over their peers.

Tuition costs between S$150 and S$400 per subject per month, or more. Five subjects would be at least S$750 per month.

If we assume 1-2 additional classes for enrichment courses such as art, sports or music classes, it’s reasonable to set aside an additional budget of about $200 per month.

Lifestyle and Living Expenses

Besides calculating the costs of education into our budget, we also need to consider and put in day to day living and lifestyle expenses.

All work and no play makes one dull, so it's important for us to keep our children happy, curious and playful. It is important to invest in things such as electronic gadgets, stationery, toys and books to ensure the holistic development of our little ones.

Nowadays, with the Covid situation, parents and children need to be more prepared for home based learning, and thus have to equip their children with laptops for easier studying purposes. And children are also using hand phones from a young age to keep in contact with their busy parents.

On top of that, we will likely give them an allowance as well.

When our children reach university age, we should also factor in whether they study locally or overseas. We will need to consider the accommodation cost as well should they be staying in a hostel or renting a room overseas.

The Cost Of Inflation

Since Singapore does not have many other natural resources besides its human capital, education is a core component to making sure our major resource sustains Singapore’s growth.

As such, the importance of education has always been highlighted, not just from a national level, but from a parental level too.

However, with a stronger demand in education, costs will inevitably rise.

How much has the cost of education already risen? And what is the average education inflation rate in Singapore?

From 2000 to 2020, the cost of education has increased by 80.7%.

Over the past 20 years (2000 to 2020), the average annual education inflation rate in Singapore was 3.00%.

With the above data, it is not likely that university tuition fees will stop increasing in future. There is nothing we can do about this fact.

Because of this, we’ll have to prepare even more for our children’s universities.

The Cost of Not Having A Degree

The ever increasing tuition fees may intimidate parents or make them reconsider if it is truly necessary for their children to obtain a degree. They may draw comparisons to the past and think that having a degree is not the only way to attain success in life. The generations before us seemed to do decently in life even without high levels of education.

However, it is crucial for us not only to look at the one time costs of going to university but to view things in the long run. There is data that suggests that holding a degree actually pays more in the long run and not having one might actually cost you more down the line.

A diploma holder's average starting salary is $2,000, while that of a degree holder is $3,000. So the difference is $1,000 at the starting line.

The gap widens further over their working life.

Every extra year of schooling increases a worker's earnings by 13.7 per cent. The rate is higher for tertiary education.

The Cost Of Procrastination

We cannot emphasize enough the importance of starting your financial planning journey early. This saves you a lot of anxiety and financial insecurity down the road and helps support your children’s educational journey and allow them to achieve their full academic potential.

Of course, none of us can predict the future and know where our kids will end up - if they’ll stop school after obtaining a polytechnic diploma or go on to study law/medicine at a prestigious university. Notwithstanding this, we can still estimate and plan accordingly.

In all likelihood, we can expect to spend about $100,000 per child for his education.

Using an automatic savings plan is one of the most efficient ways to manage these expenses. A portion of your earnings is automatically parked aside in an investment account designated for your children’s education.

Using a simple illustration:

If we need $100,000 in 20 years, we need to save $279.85 per month at 4% interest per annum.

However, if we only have 15 years to go, we need to save $416.17 per month at 4% interest per annum to reach the same amount.

If we only have 10 years to go, the amount increases to $694.09 per month. Or we may have to take on riskier investments to gain higher interest in order to reach the targeted amount..

The earlier we start saving and the more time we take to choose the right investment, the more likely we are to have the money we need.

Education is an integral part of our lives, and will likely continue to be so for generations to come.

You can use our Education Calculator to calculate how much children's education can cost locally and abroad and your shortfall.

Secure your child’s dreams and aspirations by planning early for their future. Speak to us now for a non-obligatory consultation.