The FINANCIAL — The majority (60%) of parents around the world would be willing to go into debt to fund their child’s university or college education, according to Foundations for the future, the latest report in The Value of Education series from HSBC.
Based on a survey of over 6,200 parents in 15 countries, the report reveals that those in Asia and Mexico are the most likely to be willing to go into debt to fund their child’s university education: 81% in China, 74% in Mexico, 71% in India, and 67% in Hong Kong. Parents in the UK (43%), Australia (44%) and France (46%) are the least likely to be willing to go into debt.
The main responsibility for funding children’s university education lies with parents: 84% contribute towards the cost. Countries with the highest proportions of parents contributing are Egypt (97%), Singapore (95%) and France (91%), while the lowest proportions are in the UK (67%) and Australia (58%). Nearly a third (31%) of parents with a child yet to go to university expect that their child will shoulder some of the cost of their own university education. However, only 13% of students now at university contribute towards their funding. Countries with the highest proportions of students contributing are Canada (39%), USA (37%) and Australia (22%), while the lowest proportions are in Egypt (less than 1%), India (1%), Hong Kong (4%) and Singapore (5%).
The amount parents spend each year towards their child’s university education on average is USD7,631, and is as high as USD18,360 in the UAE, USD16,182 in Hong Kong and USD15,623 in Singapore. However, more than one in four (27%) parents globally do not know how much they spend on their child’s university education each year, rising to nearly one in two (48%) parents in the UK, 42% in Australia, and 40% in France.
More than three quarters (78%) of parents are primarily funding their child’s education from day-to-day income.
Parents prioritise their child’s education over their own financial wellbeing
Paying for their child’s education is ranked by almost half of parents (49%) as more important than contributing to their own retirement savings. Countries where parents are most likely to prioritise paying for their child’s education over saving for retirement are France (70%), China (61%), Egypt (59%) and Singapore (55%).Nearly a third of parents rate funding their child’s education as more important than paying their mortgage/rent (30%) or household bills (31%). The highest proportions of parents who rate paying for their child’s education as more important than paying the mortgage/rent are in Egypt (59%), China (55%) and Taiwan (43%).
If they had to cut back on their financial outgoings, nearly a third (32%) of parents globally would be least likely to sacrifice paying for their child’s education. Parents in Asia are the least likely to sacrifice this: China (59%), Indonesia (52%) and Hong Kong (50%). This compares to only 9% of parents in Egypt and 12% in the UK.
Commenting on the findings, Charlie Nunn, HSBC’s Global Head of Wealth Management said:
“The financial sacrifices that parents are willing to make to fund their children’s education are proof of the unquestioning support they will give to help them achieve their ambitions. However, parents need to make sure that this financial investment is not made to the detriment of their own future wellbeing.
“By having a financial plan to meet their family’s overall needs and reviewing it regularly, parents will be better placed to support their children’s studies without compromising on their own long-term financial goals.”
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