Asian parents spend less than six years planning for children’s university education, says HSBC
Nearly three in five (58 per cent) parents globally consider education as the best investment they can make for their children.
In Asia, this belief is most strongly held by parents in mainland China (77 per cent), Indonesia (75 per cent) and India (70 per cent).
On average, Asian parents spend 5.8 years to plan for their children’s university education, compared to 6.6 years globally. However, the majority of Asian parents (58 per cent) wish they had started to plan and save earlier, according to a report from HSBC, The Value of Education: Springboard for success.
The report, which surveyed over 4,500 parents in 15 countries and territories, examines parents’ attitudes and behaviours towards children’s education around the world.
Parents globally have high aspirations for their children’s education. In Asia, nine in 10 (90 per cent) parents want their children to go to university and 61 per cent want them to go on to study at a postgraduate level. Parents in Malaysia (91 per cent), India (83 per cent) and mainland China (74 per cent) are among the highest proportions of those who hope their children will take postgraduate studies. Over three quarters (78 per cent) would consider sending their children abroad for university, especially Indonesia (92 per cent), Malaysia (88 per cent) and Hong Kong (86 per cent).
While Asian parents regard education as the top financial support for their children, around half (47 per cent) find making decisions about education daunting, higher than the global average of 38 per cent. The desire to save earlier is particularly strong among Asian markets such as Malaysia (84 per cent), mainland China (78 per cent), Indonesia (66 per cent), India (58 per cent) and Taiwan (54 per cent), which contrast sharply with France (14 per cent), the UK (27 per cent) and Australia (32 per cent) in the developed world.
Vineet Vohra, HSBC’s regional head of wealth development, Asia-Pacific, says: “HSBC’s new survey validates the high expectations of Asian parents to support their children through tertiary and post-graduate studies. The choices parents need to make around their children’s education can be overwhelming. All these decisions require forward planning to ensure that parents make the right choices for their family and provide the best possible opportunities for their children. Parents must start planning early and ensure that saving for education forms an integral part of their long-term financial plans.
“For those who wish to send their children abroad, foreign exchange will play a role in their efforts to save for tuition fees and expenses, with a need to exchange local to foreign currency and make overseas fund transfers. Parents can leverage different FX products and services to accumulate the foreign currency they need over time to cover these costs and in doing so, help reduce the risk of a short-fall induced by any sudden, unfavourable movement in the exchange rate.”
While parents generally have different expectations towards education at different stages, having the ability to compete in the workplace stand out as the top requirement for a good university education across the globe. In Asia, India and Indonesia are the exceptions where parents believe income-earning potential (41 per cent) and access to opportunities in life (54 per cent) are most important, respectively.
When it comes to the sources of funding, current income (76 per cent) and savings (60 per cent) are most popular for Asian parents. Less than a third (30 per cent) will draw on investments and specific education plans are relatively less common.
Vineet says: “Asian parents tend to take full responsibility for funding their children’s education. However, relying too heavily on current income and savings to fund education expenses could be risky. For parents who have a longer savings horizon, they can consider making regular contributions to fund investments or insurance savings plans to achieve a specific target. Otherwise, bond investments that offer regular returns or some life insurance plans that distribute guaranteed cash bonus will be options for parents whose children are approaching their university years, providing them with liquidity to cover education expenses. Parents should also ensure that saving for children’s education will not affect their other wealth needs and that they have adequate protection to continue funding school fees if something unexpected happens to them.”
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