A firm foundation comes from a solid education and it is every parent’s duty and desire to give their children the best possible start in life.
A foreign education is the dream of many students, but for thousands of Nigerians studying abroad as well as thousands aspiring to join them, the devaluation of the naira is a major setback and will inevitably force parents to reconsider their children’s overseas education plans. Some students will have to return to Nigeria or closer to home to complete their studies. Others may have to postpone their studies, while they or their parents desperately try to cover the shortfall. Here are a few ideas to consider in navigating this challenge.
The cost of educating your child is a significant expense irrespective of whether your child attends a private or a public school and whether that school is within Nigeria or abroad. Many parents do not plan for this huge expense until the bills are almost due. The key to successfully educating children is preparation and planning from their earliest years.
How much will it cost in the future?
By some estimates, annual increases in education costs can be as high as 10% to 15%. An education-planning calculator helps you to visualize various scenarios assuming savings over a period of time. It will help you to determine how much to put into the education fund on a regular basis in order to meet a particular goal. You can create different scenarios by entering different data as appropriate. Remember to factor in exchange rate changes if your children are to be educated abroad.
What can you realistically afford? Put in place and automate educational savings plan via a direct debit from your current account to an appropriate investment vehicle. This will help you keep your plans on track with a set goal in mind.
Are all your savings and investments in Naira? Exposure to a diversified currency portfolio typically reduces exchange rate risk. It is important, particularly if you have obligations in foreign exchange to hold some foreign currency in your domiciliary account or in an offshore account. One should also aim to build a diversified portfolio over time consisting of bank deposits, bonds, mutual funds and real estate.
Access to Foreign Exchange
The Central Bank of Nigeria has confirmed that all legitimate requests for foreign currency for eligible transactions including remittances for school fees, student maintenance allowances, Business Travel Allowance (BTA), Personal Travel Allowance (PTA), medical and other eligible transactions, shall be fully met at the official/interbank exchange rate. The process of obtaining FX through the CBN is fairly straightforward as long as the appropriate documentation and naira funding are in place.
Scholarships and Grants
Scholarships and grants are often overlooked by parents as a source of education funding. From your children’s earliest years you may have identified and nurtured a unique skill or talent, or they may be exceptionally gifted academically, making them eligible to compete for scholarships. Scholarships may be tied to a particular field of study or may require that a certain standard of performance be maintained throughout the student’s enrollment. Usually parents will still have to come up with some of the fees, but in exceptional cases they may cover all expenses. Student loans are also available but depend on a number of factors including country of origin, existing credit history and so on.
Will your children have to work?
For many families it is an economic necessity that children contribute towards the funding of their education by working full time and taking advantage of distance learning opportunities or by enrolling in part-time courses. If you are considering your child getting a job do confirm that there are no student visas restrictions regarding working in a foreign country.
Do you really have to send your children abroad?
Unexpected fee increases, exchange rate fluctuations, and other unpredictable circumstances can make overseas education increasingly challenging. For most families, planning for a local education remains the most practical option. Combined with temporary immersions through travel, summer camps or exchange experience, and with strong input and attention from parents, many young people do exceedingly well without going abroad early. Indeed not every child thrives far from home and a stay abroad could be fraught with emotional and cultural challenges.
It is important for parents to carefully consider what is best for their children in the context of their own family situation and not be forced to “keep up appearances.” It is important to strike a balance between giving your children a decent affordable education and ensuring that in your bid to educate them you don’t wipe out your retirement savings and end up becoming dependent upon them.
Nigeria has witnessed over the years, aggressive marketing by overseas institutions visiting Nigerian cities to woo “lucrative” international students; these institutions must consider introducing ways to ease the pressure including limiting the increase in tuition fees for the duration of a student’s enrollment.
Some institutions have already developed ‘condensed’ programs that make it possible for students to complete their course content earlier than the traditional 3 or 4-year degree courses or the two-year masters programs. These options offer flexibility and reduced expenses, but sometimes cause students to be under undue pressure, as they must forego important school breaks to gain extra credits. Waivers in certain subjects are also possible where transcripts clearly show that students may be exempt based on the recognition of prior learning in the same or similar subjects, and at an appropriate level. Some institutions offer discounts for paying fees for a full session and rent in advance.
It is also gratifying to see new educational establishments that offer world-class education locally yet tailored to nurturing outstanding African children in an African context. “Now is the time for the Government to look inwards and focus on building and increasing the number of high quality educational institutions from primary to tertiary level.” Bolaji Osime, CEO Global International College.
It is our hope that the educational sector will be a top priority for both the private sector investors and the government so that all Nigerians can look inwards and feel confident that their children will receive a decent education locally that can equip them for the future.
Nimi Akinkugbe has extensive experience in private wealth management. She seeks to empower people regarding their finances and offers frank, practical insights to create a greater awareness and understanding of personal finance.a
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