Hopeton Morrison, Contributor
Choosing a foreign college requires careful financial preparation. Westwood High School 2004 graduation held on July 1, 2004. - PHOTO BY CLAUDINE HOUSEN
IT IS that time of year when parents are scrambling all around to find funds to pay the college fees for their children's tertiary education. The bad news for parents and students is that the present 80 per cent subsidy on public university education in Jamaica is slated for removal somewhere within the next five years. At that time, it will hardly matter whether you send your child to University of the West Indies (UWI), University of Technology (UTech), or college in the United States and Canada as the cost will be hovering in the region of US$25,00 (J$1.5 million) based on the U.S.A College Board's estimate of average public college tuition and boarding costs.
Many parents completely
underestimate the cost of financing their children's college education.
That problem is compounded even more where couples get
married later in life and start a family in their 30s. By the time the children get to college age, those families are approaching their 50s and that point in their lives where retirement is becoming increasingly real and present.
CRITICAL NEED FOR
FAMILY DISCUSSIONS
It is situations like these that drive home the critical need for the family unit (husband, wife and children) to discuss openly the financial challenges it faces. Parents should discuss with college-bound children just how much they can afford to shoulder and how much the children should take on.
A phenomenon that is catching on in Jamaica is home equity loans where parents take out loans on the equity that they have built up over the years in their homes and use the funds to finance their children's education. It is a tried and proven method and one that we recommend to Jamaican parents to consider. Indeed, it is often
better to finance your children's education from your home than to attempt to leave that home for your children for at least three reasons.
First, the latter sometimes
creates more ill will than good when you have passed on. Second, often the children choose to live elsewhere in or out of Jamaica and some of us are very familiar with family homes that have gone into seriously dilapidated states because of this. And third, even where the children are willing to live in the 'family home', increasingly, the neighbourhood in which they grew up enters into serious decline as families move 'up and out'.
SUBSTANTIAL WEALTH
ACCUMULATION
The best way to meet the long-term goals of financing your
children's tertiary education is to engage in substantial wealth
accumulation starting from the time of the child's birth. The
recommended method for building this wealth over a long time is to go the route of the stock market. Within five years of the child entering college, it is recommended that parents consolidate gains by taking the funds from stocks and putting them in fixed-income instruments.
At the end of the day, using a combination of savings, your current income, loans and financial aid (where that is available) will go a far way in solving the college financing maze for your children.
Hopeton Morrison is general manager of St. Thomas
Cooperative Credit Union Ltd. and lecturer in the School of Business Administration at the University of Technology. Please send comments and questions to: hmorrison@stccu.com.
