UAE parents pay more than double global average for education

UAE parents pay on average US$99,378 to educate their children from kindergarten through the first four years of university. Ravindranath K / The National staff

Parents in the UAE are paying more than double the global average for their child’s education, according to a new study.

UAE parents – including locals and expatriates – say that they pay on average US$99,378 to educate their children from kindergarten through the first four years of university, according to The Value of Education: Higher and higher, a global annual report published by HSBC. The costs include tuition, books, transportation and accommodation.

The UAE came second only to Hong Kong, where parents say they paid an average of about US$132,161 for education. Meanwhile, the average among the 15 countries surveyed is US$44,221.

“In today’s highly competitive global job market, education for young people has never been more important. Parents across the world appreciate this and are willing to invest time and money to help their children get the best start in life,” said Charlie Nunn, HSBC’s Group Head of Wealth Management.

“Their unwavering support shows in the personal, lifestyle and financial sacrifices they are making. From forfeiting ‘me time’ to giving up hobbies or reducing leisure activities, parents are going the extra mile to help their child succeed.”

The cost of education has risen steadily in recent years, placing a strain on parents.

“It is a worrying statistic,” said Harish Bhatia, associate client partner at management consultancy Korn Ferry Hay Group. “We have constantly seen rising education costs in Dubai, or the UAE generally and that has been a concern for employers, just generally, in our conversations with them. Employers are questioning that they have to bear these costs for employees, and that is a big concern.”

A majority of parents – 74 per cent – who took part in the survey said they funded their child’s education from their day-to-day income. Another 36 per cent paid for school using their savings, investment or insurance; 21 percent used specific education savings and investment plan; 6 per cent took out a loan and 4 per cent paid for education with the help of an inheritance or other lump sum.

Mr Bhatia said about 50 to 60 per cent of companies operating in the UAE provide an education allowance for employees.

“The difference is a few years back they would cover pretty much the whole cost and now they don’t cover the whole cost, they just give them a capped amount and the employee takes care of the rest,” said Mr Bhatia. “So that is starting to eat up into people’s spending power, even with the employers paying to an extent.”

Less than 10 per cent of companies in the UAE offer to cover the full cost of education for employees, said Mr Bhatia.

“Very few companies provide full value allowance,” said Mr Bhatia. “I would say probably about five or seven per cent of companies provide full, only for senior management though, not for everybody.”

The average spent by all parents in the 15 countries on primary school was US$12,820; US$15,111 for secondary school and US$16,290 for university.

The study also surveyed parents about the types of sacrifices they have had to make to fund their children’s education. Thirty-one per cent of all parents said they gave up a hobby or “forfeited ‘me time’” to pay for education, 25 per cent drastically reduced or completely stopped leisure activities and holidays, 23 percent changed their working style and 20 percent developed different social circles, according to the report, which was published in June.

As the number of private schools across the Emirates have continued to grow, offering parents more choices, many schools have begun offering financial incentives to attract students, said James Mullan, co-founder of whichschooladvisor.com, who last year published a report that placed the price of education at  premium UAE schools at more than Dh1 and around Dh250,000 for a low-fee school for the full duration of a pupil’s academic K-12 career.

“Certainly at the premium end and the super-premium, there is a considerable degree of pressure at the moment, a considerable degree of pressure in terms of retaining and recruiting new children,” said Mr Mullan.

Within the past two or three years, a number of the new schools have started to offer a “founder’s discount” of up to 20 percent for students who join in the inaugural year. Existing schools are also giving scholarships and reduced fees for siblings.

“There is evidence of parents getting wise to the situation, realizing the competition is out there and saying look I’ve got three kids who I can bring to this school, what’s the best offer you can make me?” said Mr Mullan. “I think that’s really inevitable given the competition that is out there at the moment. That has been the big story really, in the last three to four years, that there is competition in the marketplace.”

The findings of the survey, which was conducted by Ipsos MORI on behalf of HSBC in February, represents the views of 8,481 parents from Australia, Canada, China, Egypt, France, Hong Kong, India, Indonesia, Malaysia, Mexico, Singapore, Taiwan, UAE, UK and USA. In each country the survey sample was at a minimum 500. France reportedly paid the least, spending US$16,708 for education.