How to plan for your child's higher education?

As a parent, you wish to provide your child with the best quality education to give them a head start in life. Higher education fees can cost a bomb and is likely the most significant expense you will spend on your child. Fortunately, you have a range of educational pathways to choose from and options for financing to help you plan better.

The tuition fees at public universities are comparatively much lower than private universities. Taking University of Malaya as an example, fees for courses in the arts or social sciences cost roughly RM10,000, while science courses may go up to RM15,000*. On the other hand, at local private university, this may cost up to RM100,000**. Obviously, international tuition fees are the costliest. For example, a U.S. education can cost up to USD50,000 per year, not including living expenses***. 

Planning early is critical to ensure you have enough funds to send your child off to university when the time comes. Here are some options to consider:

Education endowment plans are designed for the primary purpose of helping you save up for your child’s education fund. These are long-term savings plans with a guaranteed maturity benefit.

For example, Sun EduSmart is a non-participating endowment plan that includes life insurance benefit and guaranteed maturity benefit. Lump sum education rewards will be awarded to children who complete UPSR and SPM or equivalent exams, and the plan is claimable for tax relief under the insurance premium for education benefit category. In the event of the child’s guardian’s death or total and permanent disability, all remaining payments will be waived and the policy will remain in effect until maturity. This gives you peace of mind that your child’s education is protected regardless of what happens to you. 

As far as investing in your child’s education goes, a unit trust can accelerate your goals. With a unit trust, you can invest a small sum every month and earn a return starting from the child’s first birthday until the end of their secondary school. Start early – time is the best advantage you have to accumulate your funds over a long period of time. 

Taking out a loan may make sense to top up insufficient funds. The National Higher Education Fund (PTPTN) is a major lender of student loans at a fixed interest rate of just 1.0% to eligible Malaysian citizens entering local universities****. 

Aside from loans, PTPTN offers the National Education Savings Scheme (SSPN), which is a savings scheme that offers attractive annual dividend, free takaful coverage, and matching grants based on eligibility. SSPN deposits are entitled to a special income tax relief of up to RM8,000. If each parent opens a separate SSPN account for their child, each can receive the tax relief separately, totalling up to RM16,000 in relief for a single household*****!

There are plenty of private and public scholarships available for students with merit. Research government or corporate scholarships and approach the target universities to find out if they offer any bursaries or financial aid. Looking into the scholarship requirements can help you understand how your child can boost their chances of landing a scholarship.