Why UK expats should not ignore their child’s university education

UK expats planning to send their children to universities in their home nation, either need to move home to secure cheaper fees or start saving now.

Your children are likely to be regarded as international students if you are still living abroad as an expatriate family. iStockphoto.com

Parenthood is an expensive business. If you thought the pushchairs were expensive, the nursery fees daylight robbery and school fees extortionate, you are in for an even bigger surprise. By the time that once newborn bundle of yours is 18 years old, his or her college or university education is likely to be setting you back tens of thousands of pounds a year. That’s according to Toby Simpson, regional sales director for Friends Provident International. Here he reveals what UK expats, as well as those from other nations, need to know about saving for your child’s higher education:

If you’re a UK citizen and your child is too, the fact that you don’t live in the UK may mean you could have to pay significantly more than you would if you were still back home. That’s because your children are likely to be regarded as international students if you are still living abroad as an expatriate family.

For them to be treated as domestic students rather than as international, and thus pay US$14,000 at today’s rates in tuition – as opposed to $23,422 to $35,765 annually – your children would have had to have been “ordinarily resident in the UK” for the full three-year period before the first day of the first academic year of their university programme.

It doesn’t stop there: not only will they, as “international students”, be expected to pay over twice as much in annual fees than their UK resident cousins, but they’re also unlikely to qualify for UK government-sponsored financial student support, such as tuition fee loans, or, because of their British passports, qualify for certain scholarships and grants that are otherwise available to international students studying in the UK.

Planning ahead

These surprising and arguably unfair facts of expat life have received little coverage in the expat press, presumably because they affect a relatively small number of people each year. But they are extremely important for expat parents to be aware of. And they demonstrate why it is essential that you face up to the education costs issue early in your child’s life, in spite of an overpowering (and understandable) urge to look away, particularly in the early years.

Because as bad as the shock is of realising what three or four years of university education in 18 years’ time is likely to cost, (particularly after you add in such “extras” as textbooks, rent, the cost of buying and maintaining computers and other equipment and materials), it is far worse if you postpone the day of reckoning by 10 or 15 years or more.

What you can do now

One of the first things you could do is consult a financial adviser to get a sense of how much you might conservatively begin setting aside into an education savings fund. We would also suggest that you look into the different ways in which this savings fund might be held, and managed, most efficiently and safely.

Using a ballpark estimate of the minimum cost of sending an “international student” to Cambridge for a three-year degree of $177,270 for example, your adviser might recommend that you set aside a minimum of $9,847 each year from the date of your child’s birth, to achieve the necessary sum by his or her 18th year.

This scenario assumes that the savings gain no interest or growth throughout the 18-year period. In all likelihood the money that you set aside will grow, thus reducing the total amount you would have to set aside from your net earnings. Levels of growth will depend on interest rates and the investment strategies used. Investments always involve some element of risk, which your adviser would have to discuss with you.

The currency factor

Currency fluctuations over the next 18 years could have a major impact on any savings you manage to put aside, if your income is being paid to you in a different currency than that used in the country in which your child is most likely to attend university.

No one, of course, can begin to predict with any accuracy how any two currencies will move over the course of several years, let alone over an 18-year period; but as investment experts will tell you, ignoring the possibility of major shifts is dangerous, and it is something you must take into account early on.

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