- UAE parents spend the most globally on children’s higher education
- Over half (52%) looking to send children abroad want to invest in property in that country
- Nearly 9 in 10 have concerns about funding their children’s education
Despite the volatility in the global economy over the past decade, one area where prices have continued to rise is higher education. Demand for undergraduate and postgraduate education is greater than ever before, as it is widely seen by parents the world over as a stepping stone to a successful career for their children. New research from HSBC affirms this view as it shows that parents in the UAE have among the highest aspirations for their children’s education, and they pay the most on average for university globally.
The Value of Education: Foundations for the Future, a survey of 6,241 people across 15 countries and territories, including more than 400 in the UAE, evaluates parents’ aspirations for their children’s education, and the challenges they face in meeting these ambitions. HSBC’s research found that to reach the goals that parents have for their children given today’s university costs, they not only have to start putting aside money early, but it is also increasingly important that they save wisely.
Soaring aspirations for the future
The report’s findings revealed that their children’s education is one of the biggest priorities for parents and that they are least likely to make any sacrifices in this area. Given its importance, it is not surprising that those in the UAE have high ambitions for their children, with nearly an equal number wanting them to pursue an undergraduate (89%) and a postgraduate degree (85%).
However, the majority (75%) say their child’s education makes it difficult to keep up with other financial commitments – those with children in university feel this more acutely (82%) than those with children in primary school (72%). These sentiments can be attributed to the constant increase in education costs. In the US – the most popular higher education destination globally according to the research – average college tuition increased 1,225% between 1978 and 2012, outstripping the approximately 280% increase in the US Consumer Price Index during the same period, according to data from Bloomberg.
The rising cost of education
HSBC’s research shows that parents in the UAE spend the most globally on college ($18,360 annually), compared to an international average of $7,631 annually. As the country is predominantly an expat market, this is primarily driven by a large proportion of parents here (58%) wanting to send their children abroad – the second highest globally to express this sentiment after Indonesia. The most popular destinations for UAE parents include USA (53%), UK (51%) and Australia (28%), which are among the top four most expensive countries for higher education. Meanwhile, medicine (26%) is highlighted as the most popular field of study parents would like their children to pursue, the annual cost of which amounts to $26,558 in the UAE, and up to $44,724 in the USA.
Commenting on these findings, Karen Bauer, Regional Director, Education USA, said: “A higher education that is international in scope has become a requirement for those seeking top careers in today’s competitive, increasingly global job market. Parents are looking to an education abroad to give their children an advantage because it provides international work opportunities, foreign language skills, and exposure to intercultural experiences – skills that are valued by employers around the world. However, parents need to have a long-term plan in place to enroll their children abroad, especially as costs continue to rise.”
Starting early and saving wisely
While 6 in 10 parents say they start making decisions about their children’s education before they start primary school, more focus is required on financial planning. HSBC’s research shows that 7 in 10 (70%) end up relying on their daily income to meet these targets, and compounding the potential problem this may raise, nearly two-thirds (64%) would be willing to go into debt to finance their child’s studies.
“Parents naturally want the best for their children and hope that a strong education will put them in the best position to lead a prosperous life. Of those in the UAE looking to send their children abroad, half (52%) would even consider investing in a property in that country. However, the choices in terms of fields of study and the level of education parents hope their children will gain, coupled with the cost of education and accommodation, indicates there is a mismatch in aspirations and financial preparedness,” added Gifford Nakajima, Regional Head of Wealth Development, Retail Banking and Wealth Management, MENA, HSBC.
“We see today that a great deal of planning is required to meet these goals as there is no denying the fact that higher education can be very expensive. Parents can take proactive steps towards planning by looking more actively at investing in savings accounts designed for education instead of getting into debt, while others can look to instil a greater sense of responsibility amongst their children by encouraging them to play a role in financially supporting their own higher education. It’s no longer just about starting early, but you also have to save wisely.”
The Value of Education is an independent consumer research study into global education trends, commissioned by HSBC. Foundations for the future, the third report in the series, was published in June 2016 and represents the views of 6,241 parents in 15 countries and territories around the world: Australia, Canada, China, Egypt, France, Hong Kong, India, Indonesia, Malaysia, Mexico, Singapore, Taiwan, United Arab Emirates, United Kingdom and United States. The findings are based on a survey of parents from a nationally representative sample in each country who have at least one child aged 23 or younger currently (or soon to be) in education. Over 350 parents (including 150 with a child at university or college) were surveyed in all countries. The research was conducted online by Ipsos MORI in February and March 2016, with interviews in Egypt conducted face-to-face.