How to get more than 50% discount for your child’s College Tuition fee

Education has always been a priority for Filipinos.  We have heard familiar stories of how a family sold a piece of land,  ancestral jewelry, or a carabao just to put their child through college.  This function of education, even goes back to the 19^th century, when a rising middle class family began to put a premium on getting the best education for their children.  Jose Rizal was the prime example where he was sent to Ateneo and University of Santo Tomas, since his parents knew they are the best for Rizal at that time.

In my personal experience as a financial consultant, the top 3 Best Colleges, Universities for Filipino parents when ask for their dream college/university for their kids are:

1. Ateneo University
2. De La Salle University
3. University of Santo Tomas

No wonder why because according to inquirer in the link, above universities are included in the top universities in Asia since 2009, as per quality standard of education, plus University of the Philippines, of course.

As a parent now myself, if I am asked, what would be my dream university for my child? Indeed, one of the universities above will come up as my answer.  But, the problem is, I ask myself, how in the world am I going to prepare for the actual paying tuition fee?  What will happen along the way?  Will my dream for her comes true? Or will it be same with most of the parents that Dream University will just stay as a dream and my child will land in the college where my budget will fit at that time?

Another problem I have here is the annual tuition fee increase.  In the news, the annual tuition fee increase is averaged at 10% a year, yet in other news, it is pegged at 10-15% annual increase.

Below are the tuition fees of major colleges and universities of the Philippines, from GMA news 2013.

There are 3 ways on how to pay your child’s tuition fee.  These are paying the tuition fee at:

1. Inflated Cost
2. Inflated Cost with interest
3. Discounted cost

Let me discuss with you one by one:

Inflated cost – is when you pay the tuition fee for its inflated cost in the future.  The average tuition fee increase/inflation for education is 10-15% a year.  So what exactly do I mean by this?  Here is the table below:

Let us say this tuition fee is the University of Sto. Thomas and your child is 3 years old.  Since it is K-12 curriculum now, he will be starting college at 18 (that would be 15 years from now). The above table shows the Current Education Cost vs the Future Education Cost after 15 years and until he finishes his 4-year-course.  The future price is calculated at 10% annual tuition fee increase.

Imagine! 464,100 education cost today is worth 2 million pesos at the time he is in college (after 15 years)!  No wonder many parents cannot send their child to their Dream University, it is almost always, WHERE THE BUDGET FITS.  Am I right here?  I can see you’re nodding.

The second way, how to pay the tuition fee is:

Inflated cost with interest – it is paying your child’s college tuition fee at inflated cost with interest.

So, what is this? For example, your child, now a grown-up, is now 18, and you cannot pay the above tuition fee, but since it is your dream university, you still want to send him there, what you did is made EDUCATION LOAN in a bank that gives 10% interest for 5 years.  So, instead of paying just the 2 million inflated costs, there is additional 1.2 million as part of the interest of your loan.  The total education cost for now is 3.2M pesos.

The third way, which I know is what you are hoping, and what this article is all about, is the:

Discounted cost – which is simply paying your child’s tuition fee with 50% or more discount.  Well, this is not a gimmick, and you may wonder how in the world, a university could give that much discount.   This is something all of us can do which is by SAVING EARLY.  Oh, you don’t believe me? Well, here it is:

Remember the total education cost we need for the child above?  Its 2,035,155 pesos, if you are going to save now (15 years to go before he goes to college), you only need to save 58,231 pesos per year or 4,870 per month invest it in a 10% earning investment vehicle for 15 years for a total of 873,465.  So, instead of paying the 2M at the time of his college, you just need to save 4,870/month for 15 years, so you get a 57% discount.  That is worth a lot!!!

The second line tells you, after reading this article, you still procrastinate or dilly dally or in Filipino “pinagpakabukas pa”, and started doing what I told you after 5 years (10 years to go to college), now you need to save 9,853 a month instead of 4,870, but still, you get a 43% discount. And so on to the third line, 5 years to save before college can give you approximately 26% discount.

When I computed this to my child, since she is still at zero age, I even got, 87% discount! Well, clearly, the lesson here is, the earlier you save, the more discounts you are going to get.  Who doesn’t want a discount now?

There are several reasons why you want to procrastinate, since we are Filipinos, that’s what we always do, yes, you might cause an increment in salary, subsequent to an increase in tuition fee.  But, if you can’t afford the current tuition fee now, what’s more, after 15 years?

Please also remember, that above computation is just a computation for the tuition fee, you still need to consider his DAILY/MONTHLY LIVING ALLOWANCES which will include (housing, transportation, food, uniforms, books, projects… etc.).  This is usually computed as 70% of the tuition fee at the time.  Well, at least you got a discount in your tuition fee.  Or all you need to do, is include those in the computation so you will get a discount as well, or simply add a little more to the savings (amount you are comfortable to save for a number of years) to indemnify the extra expenses along the way.

With a little bit of planning now, and a hell lot of ACTION, you can achieve your dreams. Get some help now from your friendly financial coaches/advisers, this might be the time to talk to them.

I made this article since, I am a mother myself with a 10 month old baby.  As a graduate of IARFC, I need to find a way.  I need to make my dream for my child a reachable one.  I hope I put some light at the end of your tunnel towards your dream to your child’s education.

When it comes to planning your future, NOW is always the best time to start.  To learn more about Life insurance or if you need help with your financial plan/ goals, I will help you make it happen.  Feel free to contact me.

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Pinky De Leon-Intal, MD, RFC

Doc Pinky is a licensed Medical Physician, Internationally Registered Financial Consultant, Certified Investment Solicitor and Associate Wealth Planner and Estate Planner of the Philippines. She loves to educate and spread financial literacy. She is a Lactation Consultant. She loves to travel. She is a devoted wife and mother.

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