Majority UAE parents unprepared for children's education

Parents in the UAE are not adequately prepared to support the educational ambitions they have for their children, according to new research.

The research, conducted by HSBC, looks at how financially prepared parents in the UAE are to fund their child’s education, their academic priorities and expectations and how they need to be better organised in order to fulfil these aspirations.

Titled Value of Education: Springboard for Success, the research indicates the need for parents in the country to implement a sustainable saving plan in order to meet the ambitions they have for their children’s education.

The study examines the hopes that parents from around the world have of education, with a special emphasis on its value as a transformative force in the lives of their children. It examines the views of over 4,500 higher income parents from 15 countries, and 300 from the UAE, who have at least one child under the age of 23 currently in education (or soon to be), and are solely or partially responsible for making decisions about their child’s education.

The sample group of UAE parents had a minimum personal monthly income of Dh20,000. Worryingly, the survey reveals that parents in the UAE have high aspirations for their children, but that the majority are not financially prepared to meet these goals.

With two-thirds (67 per cent) of parents in the country wishing that they had begun saving earlier for their children’s education, the report reveals that they only allocate 31 per cent of their funds to this goal; far lower than the global average of 43 per cent. This in spite of four in five (82 per cent) parents in UAE believing that paying for their child’s education is the best investment they can make, much higher than the global average (64 per cent), as well as that of India (73 per cent) and the UK (48 per cent).

The lack of preparation is particularly alarming as most have high expectations of their children, with 86 per cent of parents hoping that their child will study to a postgraduate level, which also makes them among the most ambitious in the world in this aspect; outpacing the global average of 69 per cent, and that of the UK (40 per cent).

These high aspirations can be attributed to UAE parents’ expectations that higher education will have tangible financial benefits in the lives of their children; with 48 per cent citing the high-income potential and 40 per cent alluding to access to opportunities in life as the primary draws of post-graduate studies.

With most of these parents (65 per cent) also considering sending their children to study abroad in the UK (60 per cent), US (60 per cent) and Canada (37 per cent) – as they believe these locations offer the highest quality of education – the need to be financially prepared is magnified as these three countries rank among the most expensive for education globally, according to a HSBC 2013 report comparing the costs for international students studying abroad.

Additionally, for those parents looking to send their children to pursue higher education in the UAE, the three most popular university degrees - business, engineering and law - are typically more expensive than degrees in non-vocational courses.

This year’s HSBC Value of Education report shows that due to this lack of preparation, virtually all (99 per cent) parents in the country are funding their children’s education fully or partially through their current income, and almost a third use current savings (32 per cent), while funding through investments (2 per cent) or specific education plans (1 per cent) is very rare.

In this regard, the UAE is far behind the global average, where people cited that they can rely on savings (44 per cent), investments (24 per cent) and specific education plans (14 per cent), in addition to their current income (84 per cent). 

Commenting on the need for parents to start planning early, Gifford Nakajima, Regional Head of Wealth Development, MENA, HSBC Bank Middle East, said: “We see that parents are not aware of how they can financially prepare for their child’s future, with the survey revealing that more than half find making decisions on this issue a daunting prospect. While there is an evident tendency to fund these costs through current incomes, parents have to realise that they need to move beyond relying on these short-term approaches to funding their child’s education, and they will need to have a concrete saving plan in place in order to sustainably support their long-term aspirations. This is also critical as it will allow them to take steps towards preparing for other financial priorities, such as saving for retirement.”

Another key insight from the report is that parents say it takes over eight years to plan for primary, secondary and tertiary level education, reiterating the need for them to start planning and commit to this objective as soon as possible. Compounding this problem and making the prospect of higher education more daunting is that parents in the UAE do not receive contributions from their children when it comes to paying for education; whereas, 7 per cent of parents globally can rely on support from their children in covering these costs.

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