The document discusses strategies for planning and saving for education costs. It provides information on average costs of university by country for both domestic and international students. Key points include: university is most expensive in Australia and the US for international students; domestic costs are lower but vary by country and program of study; planning and saving early through vehicles like 529 plans in the US can help offset costs; scholarships may be available but are competitive; and property investments can help but carry risks demonstrated in the 2008 financial crisis. Overall, the document emphasizes starting a savings plan as early as possible to have financing options for higher education.

1. 1
| Education Fee Planning

2. 2
Introduction..............................................................................................2
University and College Fees by Country..............................................3
United States: Nationals vs Non Nationals
Australia: Nationals vs. Non Nationals
United Kingdom: Nationals vs. Non Nationals
Europe: Nationals vs. Non Nationals
Average cost of education......................................................................5
How to ensure that you are ready?.......................................................6
Saving for University...............................................................................7
Development in student loans since the financial crisis...................8
Case Study.................................................................................................8
AMA Education | Contents
| Introduction
As the cost of education continues to rise, the importance
of charting out your financial future through long-
term financial planning has increased dramatically.
This reality means that the earlier you plan, the more
efficiently you will be able to save for your child’s
education. These considerations should include primary
and secondary education as well as the potential for
higher level education, guaranteeing the best
opportunities for your children.
It is essential that everyone with children consider the
great expense that comes with education. Whether you
live overseas or in your home country, education will
always come at a cost, which can eat away a family’s
net disposable income, savings and incur substantial
debt. These large debts or losses of opportunity can be
prevented with careful financial planning and time
management accompanied by reliable financial advice.
Making a carefully thought out plan in advance will
put your mind at rest, giving you considerably more
financial freedom.
A long-term financial plan ensures that your children
get an excellent start in life, basing the decision of
whether to pursue higher education on ability and
determination, rather than financial restrictions.
At Austen Morris Associates, our financial consultants
offer advice on a variety of saving solutions to suit clients’
individual circumstances. Through a tailor made, long-term
financial plan, we help you achieve your financial goals from
beginning to end.
It is important to realize that financial success and flexibility does
not happen overnight. The need for preparation and prioritizing
your spending should start today. It is never too early. A parent
should seek to start saving from the day their child is born.
The costs of education, including tuition, accommodation
and living costs in a top 50 college or university is around
US $200,000 per child, therefore taking a pragmatic and
structured approach to education saving is essential.
Tax efficient education plans and low interest loans are
widely available globally and can be a great funding medium
for bridging the education shortfall.

3. 3
| Student contribution band
| 2014 Student contribution range
(per EFTSL)
BAND 1 | Humanities, behavioral science, social studies,
education, clinical psychology, foreign languages, visual
and performing arts, nursing
AU$0 – AU$6,044
BAND 2 | Mathematics, statistics, computing, built
environment, other health, allied health, science,
engineering, surveying, agriculture
AU$0 - AU$8,613
BAND 3 | Law, accounting, administration, economics,
commerce, dentistry, medicine, veterinary science
AU$0 - AU$10,085
A few years ago, the outstanding student
debt in the U.S. reached US $1 trillion. Going
to university in America for U.S. and Non
U.S. citizens at a top private school costs
roughly US $60,000 per year. The costs do
vary; US $17,000 for a community college,
US $23,000 for an in-state student at a
four-year public college, US $40,000 out-of-
state students or International students at a
four-year public college and US $46,000 for
a private non-profit four-year college. This
may not include other miscellaneous costs
such as books (which is on average US $800
per school year) and everyday activities1
.
Given the overwhelming pressure it puts
on parents, there are several savings plans
that are offered; such as “529 college
savings plan”, a state-operated education
savings plan that helps families set aside
money for their children’s higher education.
This is available for U.S. citizens only.
The money you invest will accrue without
being subjected to federal income tax but it
can only be used on qualified educational
expenses (e.g. room and board, tuition, and
books). Additionally, five states (Arizona,
Kansas, Maine, Missouri and Pennsylvania)
give a tax-break if you are contributing to
any state’s 529 college savings plan.
Plans can be used for a student of any age.
Uniform Gifts to Minors/Uniform Transfers
to Minors Accounts (UGMA/UTMA)
are another option for US Citizens only.
Custodial accounts invested in the child’s
name can be used for any expense for the
benefit of the child. However, they do not
have many tax benefits. Coverdell
Education Savings Accounts, formerly
known as the Education IRA, offer tax-
deferred growth and are designed for a
child’s educational expenses.
Universities in the U.S. offer an additional
funding option called “need-based aid.”
This aid differs from aids based on academic
ability and/or special talents and is based
on demonstrated financial need and aid. In
order to qualify, you must fill out the Free
Application for Federal Student Aid (FAFSA),
which will determine federal, state and
institutional need-based aid eligibility.
This option is highly unlikely given the
large demand for higher education funding
and is not even a viable option for
non-US-living citizens2
.
The possibility of receiving a grant for
university aid in the U.S. is not only based
on your current financial status and income
but the number of children you have,
medical bills, cost of living and dependents,
for example taking care of elderly relatives,
are all taken into account by top universities.
It is also worth noting that some top U.S.
universities offer “needs blind” financing,
which means that students’ academic
applications are separate from their financial
application, so getting rejected for one has no
impact on the other.
1
http://www.businessinsider.com/tuition-costs-by-country-college-higher-education-2012-6?op=1
| United States: Nationals vs. Non Nationals (must have a Social Security number or Tax ID) | Australia: Nationals vs. Non Nationals
According to a recent HSBC report,
the cost of higher education in Australia is
higher than any other country. The average
cost per year of study in Australia for
international students is AU $41,480 (US
$38,516), which breaks down to AU $27,320
(US $25,375) for fees and AU $14,148 (US
$13,140) for cost of living.
In Australia, the cost of university can
change drastically depending on what course
you study as well as the university you study
at. For example, to obtain an international
undergraduate degree at Australian National
University (ANU), rates range between AU
$24,746 (US $22,830) for many Bachelor of
Arts programs, to AU $59,573 (US $55,551)
for Bachelor of Medicine and Bachelor of
Surgery. For graduate level programs, annual
fees are from AU $24,746 (US $22,830) for a
few master’s programs and up to AU $31,601
(US $29,466) for the majority of
PhD programs.
When looking at Australian universities,
there may be other unpredicted costs. For
example, student visas range from being
free to costing $500, as well as having to
purchase international health care coverage
for when you are studying there. Note
that not all health care is approved by the
government therefore your current health
care coverage may not be valid.
For domestic students, the cost of university
depends on what course you study and what
band they come under (see table below).
Band 1 includes subjects with the lowest
costs, while band 3 includes subjects with
the highest cost. If you take courses solely
comprised of band 1 the maximum you
will pay for a full time study is AU $6,152
(US $4,781), however if you mix courses
from different bands the fee will vary
depending on how many credits you take
from each band.
| University and College Fees by Country

4. 4
Tuition fees for higher education
in the United Kingdom vary based
on your nationality and area of
study. In 2011-2012, tuition fees
went through changes that caused
the cost for several areas to triple.
On average, universities in the
UK cost somewhere between
£7,000 - £9,000 (US $10,778.98 –
US $13,858.93) for UK Nationals
and £12,000 (US $18,480.17)
International Students plus £7,000
(US $10,778.98) for average living
costs. In London the total cost can
be up to £40,000 (US $61,600.40).
The UK Council for International
Student Affairs (UKCISA) features
the conditions needed to be met
in order to be able to get “home”
rate higher education fees in
England. These involve several
residency requirements, which can
be a challenge for international
individuals who are not presently
in the UK. EU passport holders are
entitled to this UK “home” rate
as long as they have lived in a
EU country for at least the past
three years before the school
starting date.
These conditions may be a problem
for EU citizens who have been
away for the past couple of years
given that they will be considered
as “international students.” An
international student will have
higher tuition fees than EU and
UK “home” students3
.
In UK, the UK Children’s Trust
Funds has been discontinued,
further showing the lack of support
and commitment to education and
the need for personal funding4
.
The European university system is mainly based on public funding, which
is why schools there can provide a great education at a fraction of the price
in the U.S. University fees for EU students are the same regardless of
where they originate from in Europe and they are automatically allowed
to study in any EU state of their choosing. Furthermore, they are able to
get a residence permit to obtain financial sustainability. The same works
for students from the European Economic Area (EEA) and Swiss students.
However, some conditions regarding public student loans and residence
permit might differ for them.
The average tuition fee for students from EEA taking an international
Masters program in a EU country is €5.100 (US $5,776) and €10.170 (US
$11,519) for international students. While the average cost of a bachelors
degree is € 4.500 (US $5,096) for EEA students it is €8,600 (US $9,740) for
international students. It is worth noting that this varies on the country
itself in the EU, as there is not a blanket rule for all of them.
Some countries have higher fees and other have much lower ones. It is also
worth noting that, while European universities may seem as viable low-
cost options, they have the largest dropout rate after the first year.
Some universities have reached a 50 % dropout rate as opposed to U.S. and
UK universities, which have a near 100 % retention rate from the first to
second year5
.
3
http://www.foreignstudents.com/universities/fees
4
http://www.ukcisa.org.uk/International-Students/Fees--finance/Home-or-Overseas-fees/England-Higher-Education/
5
http://www.mastersportal.eu/articles/405/tuition-fees-at-universities-in-europe-overview-and-
comparison.html
| United Kingdom: Nationals vs. Non Nationals
| Europe: Nationals vs. Non Nationals
It is certainly worth considering
the Higher Education Contribution
Scheme (HECS) for Australian
Nationals. This financial option
allows university students to defer
on their university bills to the
Commonwealth as long as they pay
a student contribution (the amount
depends on where and what you
study but the amount is capped
by the government). Once they
start working and reach a certain
income level, they will start paying
back their “HECS debt” through the
tax system.
Full reliance on loans and deferred
payments should not be considered
the only option. Be sure to
compare the various features of
different plans and their eligibility.
Contributions are limited and
cannot exceed the amount required
to pay for a higher education
degree and the expenses associated
with it.
Australian Higher Education
Loan Program or HELP, provides
eligible students with student
loans and discounted education
fees. Potential student debt of AU
$120,000+ and interest at 4
percent p.a. could leave a student
in post education trauma with
crippling debt.

5. 5
| Average cost of education
The figure above shows the average total
cost per year in different countries for
international students. The Australian
bachelor of medicine has the highest tuition
fee for international students, while the top
50 U.S. universities have the second highest.
EU bachelors and masters have the lowest
tuition fee for international students. “Room
& Board” is most expensive in Australia
while books and supplies in Australia have
the lowest costs compared with the other
countries. This figure is a good estimate of
how much a student will spend, however
note that this is subject to change at any
moment, with changes to living costs and
housing as well as the actual exchange rate
varying from currency to currency.
The figure above shows the average cost for
domestic students. It is clear that domestic
students’ tuition fee is lower than fees for
the international students. Although the
top 50 U.S. universities have the highest
tuition fee and the private colleges have
the second highest, this is because they do
not differentiate between international and
domestic students. The “Room & Board”
and “Books & Supplies” cost the same for
international and domestic students. It is
only the tuition fee that varies. Note that
for four-year public schools this is only
applicable for in-state students, students
living in other states in U.S. will count
as international students. Also note that
Scotland is free for students living in
Scotland and Europe but not free for those
living in England, Wales and Northern
Island. This figure is an estimate of how
much a student will spend and is subject
to change with changes in living costs and
housing as well as the actual exchange rate.

6. 6
Things change every day. The key to being prepared is
having the ability to self-fund. Many parents look for low
cost or free education throughout Europe and Canada,
for example. These places have outstanding colleges and
universities, but it can be very difficult to gain access to
them due to high local and international demand. In addition,
the specialist nature of the international child’s mindset
generally means that to achieve their full potential, only the
top schools are good enough. These establishments can also
have the biggest price tags.
Scholarships are widely available globally, providing
reduced or free funding for an exceptional student,
however it can also be clear to see that even with top
grades the lure of a scholarship can disappear very quickly
once the interest in a school has been solidified, leaving
zero benefit and an unexpected balance to be paid. Our
advice is to be assertive and push for discounts and
clarification of the process for scholarship acceptance at
an early stage to avoid disappointment.
The use of property purchases to bridge education funding is
a widely used investment strategy. The growth on property
over the medium to longer term can produce great and
sometimes exceptional returns and long term capital to fund
education. As a cautionary consideration, the desperate plight
of millions of U.S. and Europeans caught in the property
crash of 2008 is a message that such an illiquid asset, which
in principle seems to be low risk and high gain, can leave
a sour taste. With the Asian property markets unsure of
the direction they are going, caution should be taken if you
decide this is your preferred savings strategy.
The reality is that we can build capital through a lifetime,
from birth to late teens, within a relatively focused savings
strategy. In both the domestic and international market
many plans exist to mitigate the shortfall, with guaranteed
capital secure to more aggressive savings products. The
level of shortfall and levels of savings required to mitigate
this shortfall can be accurately calculated by your financial
consultant as part of your ongoing financial review process.
As with all financial products, ensure you are comfortable
with the product features including investment risk and
charging structures.
6
Austen Morris Associates Senior Consultant | Matthew Riddington
| How to ensure that you are ready?
| I believe one thing is clear – the days of free
education are getting further away and only those
who have the financial capability will have a choice,
so take full advantage of the opportunity to plan.
6

7. 7
| Saving for University
| Do | Dont
Have a plan pretty early on, almost as soon as you decide to have a child and that
he/she is going to go to university. Many education savings plans such as the U.S.
“529 college savings plan” allows you to invest even before your child is born.
1. 1.
2. 2.
3.
4.
5.
Start too late: if you do not start thinking about higher education expenses until your
child is a teenager, then you will not have time to save enough to cover for all the
expenses, especially if you are planning on sending your child to school in the U.S.
Underestimate inflation when it comes to tuition prices and other expenses
(e.g. books, everyday living).
Put aside some money from your income each month to avoid the temptation of
using it for something else.
Be realistic with your economic capabilities: If your economic capabilities are
limited, do not expect to save enough for top-tier Ivy League universities unless you
take advantage of the funding options in your country.
Do research: Search for different saving plan options and institutions and find
the one that suits you and your needs the best. The higher the return, the less you
will need to put away each month! Also, make sure you read the fine print and
understand the financial terms of your saving plans. For many of these, the child
is responsible for the tax on their interest payments as soon as they turn 16 and
they will have to file the appropriate forms. To do so, they will need to have their
accounts held in someone else’s name to be transferred to them.
Take advantage of federal funds or local programs provided by your home country.
Grant money is another option for funding and does not need to be paid back.

8. 8
6
http://www.bloomberg.com/bw/articles/2012-09-06/
student-loans-debt-for-life#p2
As you learned, student loans in the U.S.
have surpassed US $1 trillion and the
burden of debt for students is increasing
every day. Student debt, which is being
compounded by rising enrollments, is
growing almost US $3,000 per second. In
2010, student debt exceeded credit-card
debt for the first time ever, and only a year
after in 2011, it surpassed auto loans.
Student debts keep increasing despite other
forms of debt shrinking. In March 2011,
the Consumer Financial Protection Bureau
announced that student debt grew US $300
billion from 2008, while all other forms of
debt decreased by US $1.6 trillion. Despite
these outrageous figures, people are still
willing to incur in almost lifetime debts
in order to bask in the benefits of having
a college/university degree. An example
of this is that the earning advantages of
graduates compared to non-graduates has
doubled in the past 30 years, which further
incentivizes people to borrow money to
finance their higher education.
Furthermore, the economic recession from
2007 has forced people back into school
as a haven from the less than friendly
job market, thus driving up the costs of
getting a higher education. Two-thirds of
seniors graduated with loans of an average
of US $25,000 back in 2010. On average,
students take around 10 years to repay
their student loans, but in other cases, it
can take up from 20-25 years depending
on the payment plan and the cost of the
school attended6
.
Bennett is a 28 year old who is currently working as a teacher. He graduated from
Indiana State University in 2010 with a Bachelor’s degree. When he was young,
his family had an average income that was enough to live on, but not enough to
pay for his higher education. He wanted the opportunity to better his future, but at
the same time he knew that he could not do so given that his family did not have
enough money.
Then, he heard about the option of “student loans” and he thought that he could
just pay it off after he graduated and got a job. He needed co-signers, so he got his
parents to sign with him. Unfortunately he was not informed about what it entailed
to take out a loan, as well as the consequences and how hard it would be to pay them,
especially due to the harsh working market. After taking out loans to pay for school,
he graduated and learned fast that what you owe in loans is mostly interest and very
little principle given the high interest levels (~10%). He graduated with a debt of
roughly US $50,000 + compounded interest.
To this day he is still working on payments for his student loan and a big part of his
after-tax income goes towards his payments. He is considering going back to school
to improve his working opportunities, but he does not want to increase his currently
existing debt. If he decided to go back to school and get a Master’s degree at a private
university, his debt could accrue up to six figures.
For more information please contact us at enquiries@austenmorris.com
| Development in student loans since the financial crisis
| Case Study