New Delhi: Parents are taking on extra work, sacrificing holidays and turning to borrowing to pay for all aspects of their children’s university education, while students estimate they spend more on takeaways than they do on textbooks over the course of a degree, HSBC’s The Value of Education – The Price of Success report reveals.
Parents with a child in university who have a specific education savings account
Average – 58%
Indonesia – 90%
India – 85%
Malaysia – 85%
Mainland China – 76%
According to HSBC’s study of 10,000 parents and 1,500 students across 15 countries, 4 out of 5 parents (84%) rely on their day to day income to support their child’s university education, with 41% having no specific education savings fund at all.
With parents spending an average of USD16,338 on their child’s tertiary education, many are forced to make some significant sacrifices. Contribution is highest in Hong Kong, where parents are prepared to spend an enormous USD51,656, followed by UAE (USD29,398), Singapore (USD26,377), and Mainland China (USD21,046). Indian parents spend an average of USD 5560 on their child’s education over a typical university course.
Over one third (35%) of parents globally and just under two-thirds (64%) parents in India say they have taken on debt to put their kids through university. Loans and credit cards are the most common form of borrowing for Indian parents
In the face of financial pressure and lack of long-term planning, many parents are forced to make personal sacrifices to support their children during their studies. Around 60% Indian parents (vs 53% parents globally) say university has forced them to reduce leisure activities such as eating out at restaurants and trips to the cinema, while 59% Indian parents (vs 41% parents globally) have taken fewer holidays and 49% Indian parents (vs 35% parents globally) have taken on extra hours at work and/or a second job.
While student expenditure might be high, many are turning to part-time employment to fund their lifestyle and keep up with costs. More than 4 in 5 students Is university education worth the money? (parent with child in university vs student comparison)
UK – 49% v 68%
USA – 71% v 82%
India – 85% v 81%
Australia – 59% v 67%
Singapore – 69% v 65%
Canada – 73% v 64%
UAE – 69% v 89%
Hong Kong – 77% v 62%
Taiwan – 75% v 64%
France – 32% v 48%
Mexico – 87% v 86%
Indonesia – 74% v 66%
Malaysia – 60% v 66%
Turkey – 59% v 53%
China – 89% v 90%
(83%) globally are working while studying, most commonly for extra money (53%). On average, students spend 3.4 hours in paid employment, more than they spend in lectures (2.7 hours), studying at home (2.5 hours) or at the library (1.6 hours). However, most parents prefer for their children to concentrate on their studies instead, with 77% of those with a child at university saying they plan to look after their child’s basic living costs so they can focus on their studies.
61% of Indian parents wish they had started saving for their child’s education earlier while 46% wish they had saved more regularly. Alarmingly, 35% of Indian parents worry that they don’t have the financial resources to support their child’s education. Despite the significant investment, the value of tertiary education is still clear in the eyes of both parents and students, with 68% of parents globally with a child at university and 70% of students saying that a university education is worth the money. 85% of Indian parents agree that a university education is worth the money.
Commenting on the survey, S Ramakrishnan, Head-Retail Banking & Wealth Management, HSBC India said: “For many young adults, university marks the beginning of greater financial independence, making it a practical time for parents to sit down and have an honest discussion about how to manage their money. It’s clear from our research that many parents regret not thinking ahead when it comes to funding their children’s education, with over half wishing they had started saving earlier.
“University is a major investment and an expensive time for both parents and students. Sound financial planning and honest conversations about the cost of education as a family will help avoid financial pressures and short-term borrowing, enabling focus to be placed firmly on studying.”
Here are some practical steps drawn from the research findings, for parents to consider when planning for their children’s education:
Start planning early
Early planning and saving for education can help your children fulfil their potential and limit the strain on family finances. Seeking professional advice can help you plan and make better informed choices.
Be realistic about the costs
The cost of university education for your children can be expensive. Take into account all the costs when planning how to financially support them through higher education.
Instil good financial habits
Help your children to plan and manage the costs of student life by taking advantage of the budgeting tools and calculators available online.
Invest in a range of skills
Help your children choose an educational route that will equip them with the softer skills needed for the workplace of the future like problem solving and social skills as well as the specific skills for their chosen career.