Himal Parbhoo | CEO | Insurance | FNB | mail me |
As thousands of matriculants across South Africa prepare to sit for their final examinations, many parents are reflecting on years of sacrifice, planning and financial commitment.
These efforts have brought their children to this milestone. Yet matric marks the end of one chapter, while our Education Insights suggests that the biggest education costs may still lie ahead for many families.
Every January, South African parents find a way to pay school fees. Some pay upfront, while others manage the expense month by month. Either way, parents do their best to give their children opportunities for a brighter future. Encouragingly, 86% of the parents surveyed said they have some form of plan for their children’s education, regardless of income level. However, the real question is what that plan is designed to cover.
A plan built around school fees
When we asked how parents actually pay for education, the answer was their salaries. Six out of ten parents fund every category of education costs from their monthly income. Savings and investments provide a thinner second layer of support. Meanwhile, one in five parents pays tuition using bonuses and overtime.
What’s clear is that many parents design their plans around the next school invoice. However, these fees represent only part of the education costs they can see. The unseen expenses include uniforms and stationery, transport, and the smart device that becomes a requirement somewhere around high school. They also include sports tours, extra lessons and school trips.
Parents told us they struggle to estimate the true cost of an education. Moreover, they find the additional expenses the hardest to price. Consequently, the cost of education extends well beyond the school fees that parents typically prioritise.
The biggest challenges for your monthly salary
If you pay school fees using your salary alone, you face two major challenges. These are the effects of education inflation and the costs of tertiary education.
Education costs in South Africa have outpaced general inflation for most of the past two decades. A parent who can comfortably afford Grade 1 on today’s income may struggle to afford Grade 12 later.
This can happen without the parent doing anything wrong. Yet few of the plans we examined included a strategy to address this gap. Instead, many parents simply hoped their salaries would keep pace with rising costs.
For matric parents, the next challenge is often the most expensive one
As matric learners prepare to complete their final school examinations, many families are beginning to focus on what comes next. For many, tertiary education represents the single largest financial commitment in their children’s education journey.
Generally, tertiary education represents the most expensive phase of an education journey. It is also the phase where tuition fees often account for only part of the total cost. Accommodation, food, transport, data and textbooks all add to the expense. Furthermore, the basic cost of a young adult living away from home can exceed tuition itself.
Parents with children in earlier education phases underestimate university costs. Interestingly, parents whose children already attend university also underestimate these expenses. Fewer than six out of ten plans extend to tertiary education at all.
Among parents of pre-schoolers, two in three feel very confident that their plans will cover university costs. However, that figure falls to four in ten among parents whose children already attend university. Parents without a plan for this phase told us they would simply “wing it”.
The plan nobody wants to need
There is also a difficult question that sits beneath every education plan: what happens if something happens to you?
Eighty-three percent of parents told us they have a plan for their children’s education if the primary earner dies. Typically, they rely on emergency savings, followed by life cover. However, fewer than half of parents have savings or protection specifically set aside for education.
Parents themselves recognise the weaknesses in these arrangements. One parent explained that if life insurance paid out a lump sum, surely some of that money would go towards education. The challenge, however, is that a lump sum must cover several competing needs. These include a bond, a car, a funeral and a household’s monthly expenses.
More than half the parents in our study have already faced a choice between paying for education and meeting another financial need. They sacrificed holidays, retirement contributions, cars and, in some cases, their homes. Parents will sacrifice almost anything to protect their children’s education. It is the one thing they refuse to compromise on. Yet it is also the one thing most have never specifically protected.
What the structured planners do differently
The good news from this research is that the parents who get it right tend to follow more structured plans. They also start early. One in five began planning before their child was born, while most had started before primary school. Their plans also extend further into the future.
Two-thirds plan beyond tertiary education and use multiple investment products dedicated to education funding.
Seven in ten parents told us they would have planned differently. Their answers were almost always the same: they would have started earlier and saved more. Structured planners were the least likely to express this regret.
What this asks of us
Some of the responsibility rests with parents. They need to plan for the full education journey rather than focus only on this year’s invoice. This means building in the assumption that education costs will rise faster than income.
However, financial institutions carry an even greater responsibility. Parents told us that products designed for this purpose feel rigid and difficult to compare. Furthermore, when they searched for help, most stopped at Google and family advice. By the time they received professional advice, it often felt too late.
If South Africans value education above everything except a roof over their heads, it deserves planning tools that reflect this commitment. These tools should offer the same clarity and flexibility that families need when making long-term financial decisions.
As matric learners take their seats in examination venues across the country over the coming weeks, many parents will feel proud of reaching an important milestone. However, matric is not the finish line for most families.
Whether the next step involves university, a TVET college, vocational training or entering the world of work, the financial journey often continues well beyond Grade 12.
School fees will continue arriving every January. Nevertheless, a successful education plan must account for the full cost of learning, growth and opportunity. It must also support children long after they write their final matric examination.
