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By Himal Parbhoo, CEO of FNB Insurance
As thousands of matriculants across South Africa prepare to sit for their final examinations, many parents are reflecting on the years of sacrifice, planning and financial commitment that have brought them to this milestone. Yet while matric marks the end of one chapter, FNB’s Education Insights suggests that for many families, the biggest education costs may still lie ahead.
Every January, South African parents find a way to pay school fees. Some pay upfront, while others manage the expense month by month. Either way, parents are doing their best to give their children opportunities for a brighter future. Encouragingly, 86% of the parents surveyed said they have some form of plan for their children’s education, regardless of income level. The real question, however, is what that plan is designed to cover.
A plan built around school fees
When we asked how education is actually paid for, the answer was the salary. Six out of ten parents fund every category of education cost from monthly income. Savings and investments are a thinner second layer, and one in five parents pays tuition out of bonuses and overtime.
What’s clear here is that many parents’ plans are designed around the next school invoice. But the trouble is that these fees are only part of the education you can see. The unseen part is everything else: uniforms and stationery, transport, the smart device that becomes a requirement somewhere around high school, sports tours, extra lessons and school trips.
Parents told us they struggle to estimate the true cost of an education, and the costs they find hardest to price are often the extras.
The biggest challenges for your monthly salary
If you’re paying school fees off your salary alone, you’re up against both the effect of education inflation and the costs of tertiary education.
Education costs in South Africa have outrun general inflation for most of the past two decades. A parent who comfortably affords Grade 1 on today’s income becomes, without doing anything wrong, less able to afford Grade 12. Few of the plans we saw had a strategy for that gap other than the hope that their salary would keep up.
For matric parents, the next challenge is often the most expensive one
As matric learners prepare to complete their final school exams, many families are beginning to focus on what comes next. For many, tertiary education represents the single largest financial commitment in their child’s education journey.
In general, tertiary education is the most expensive phase of an education, and it is the phase where the fee is often only part of the cost. Accommodation, food, transport, data, textbooks and the plain cost of a young adult living away from home can exceed tuition itself.
Parents with children in earlier phases underestimate what university costs, as do parents whose children are already there. Fewer than six out of ten plans extend as far as tertiary education at all. Among parents of pre-schoolers, two in three are very confident their plan will cover university. Among parents whose children are actually at university, that falls to four in ten. The parents without a plan for this phase told us they will simply “wing it”.
The plan nobody wants to need
There is also the harder question underneath every education plan: what if something happens to you?
Eighty-three percent of parents told us they have a plan for their children’s education if the primary earner dies. Covering that gap is typically emergency savings followed by life cover. Fewer than half of parents, however, have savings or protection set aside specifically for education.
The parents themselves understand the weaknesses here. One told us that if life insurance paid out a lump sum, surely some of it would go towards education. The challenge is that a lump sum has to go a long way, covering a bond, a car, a funeral and a household’s monthly expenses.
More than half the parents in our study have already had to choose between paying for education and another financial need, and what they gave up was holidays, retirement contributions, cars and, in some cases, the house. Parents will sacrifice almost anything to protect their children’s education. It is the one thing they refuse to compromise on, and the one thing most of them have never specifically protected.
What the structured planners do differently
The good news in this research is that the parents who get it right are the most structured, and they start early. One in five began before their child was born and most had started before primary school. Their plans also run longer, with two-thirds planning beyond tertiary education and using multiple investment products dedicated to education funding.
Seven in ten parents told us they would have planned differently, and what they would have done is almost always the same: started earlier and saved more. Structured planners are the least likely to say so.
What this asks of us
Some of this sits with parents. It asks them to plan for the full education journey rather than just this year’s invoice, building in the assumption that costs will rise faster than income.
But more of it sits with us as financial institutions. Parents told us the products built for this purpose feel rigid and hard to compare, and that when they went looking for help, they mostly stopped at Google and family advice. By the time they got advice, it often felt late.
If education is the investment South Africans say they value above everything except a roof over their heads, it deserves planning tools as clear and flexible as the commitment behind them.
As matric learners take their seats in exam venues across the country over the coming weeks, many parents will feel a sense of pride at reaching an important milestone. But matric is not the finish line for most families. Whether the next step is university, a TVET college, vocational training or entering the world of work, the financial journey often continues well beyond Grade 12.
While school fees will keep arriving every January, a successful education plan needs to account for the full cost of learning, growth and opportunity long after the final matric exam has been written.
INFO SUPPLIED.