Here’s How to Plan for Your Child’s Education in Singapore | Education Planning 101

Planning for your child’s education in Singapore can feel like navigating a maze of financial decisions, but don’t worry – I’ve got you covered.

Having walked this path myself and helped countless parents through Dollar Bureau, I understand the challenges and nuances involved.

In this post, you’ll learn:

• What education planning involves
• Why it’s crucial for your child’s future
• Current and future tuition costs, both locally and overseas
• Available grants, scholarships, and bursaries
• Smart savings and investing strategies to fund your child’s education

Stick around to discover how to turn this daunting task into a structured, achievable plan.

Let’s dive in and secure your child’s educational future together!

What is education planning?

Education planning is all about taking a structured approach to ensure your child receives a quality education throughout their life, starting from preschool and kindergarten, through primary and secondary education, all the way to post-secondary and tertiary education.

It’s not just about picking the right schools; it involves detailed planning and financial foresight to make sure you’re ready for the costs associated with each stage of your child’s educational journey.

At its core, education planning includes 3 key components: budgeting, saving plans, and investing.

Budgeting is crucial because it helps you understand and manage the expected expenses at each stage of education.

Knowing the cost of preschool, primary, secondary, and tertiary education in Singapore can help you set realistic savings goals.

Saving plans are another critical aspect of education planning.

These plans, such as education savings accounts or endowment plans, are designed to help you systematically set aside money over time.

For example, a plan might require a minimum investment of $200 per month over a set period, ensuring that you build up a significant fund by the time your child needs it.

One popular option in Singapore is the Child Development Account (CDA), part of the Baby Bonus Scheme, which provides a dollar-for-dollar matching contribution from the government for savings deposited into the account.

Investing is the third pillar of effective education planning.

By investing, you can potentially grow your savings faster than through regular savings accounts alone.

Why is it important to plan for your child’s education?

Planning for your child’s education is crucial because it lays the foundation for their lifelong learning and development.

By ensuring they have access to a robust educational framework from an early age, you’re setting them up with the essential skills and knowledge they need to succeed in various aspects of life.

Quality education is not just about academic achievements; it’s about fostering critical thinking, creativity, and social skills, which are all vital for personal growth and future success.

Moreover, having a plan in place ensures that your child can access the best educational opportunities available.

In Singapore, the cost of education can be significant, especially if you aim for top-tier preschools, primary, and secondary schools, and eventually, tertiary institutions.

Without proper financial planning, these costs can become overwhelming, potentially limiting your child’s educational choices.

By saving and investing wisely, you can afford to enrol your child in quality educational programmes that offer better learning environments, more resources, and experienced educators, all of which contribute to a more enriching education.

Another important aspect of planning for your child’s education is preparing them for future challenges.

The world is rapidly changing, and the skills and knowledge required to thrive are evolving.

By planning ahead, you can ensure your child is equipped with the latest tools and learning methodologies to stay competitive.

This includes not only academic excellence but also extracurricular activities and specialised training that can give them an edge.

For example, learning new languages, coding, or engaging in arts and sports can significantly enhance their capabilities and readiness to tackle future challenges.

How much do you need for your child’s education in Singapore & overseas?

The cost of your child’s education in Singapore and overseas can vary widely, depending on the type and level of education you aim for.

Understanding these costs is crucial for effective education planning.

In Singapore, preschool education can range from $300 to $1,500 per month, depending on whether you choose government or private institutions.

Primary and secondary education in government schools is relatively affordable, with fees ranging from $6 to $13 per month for citizens, but these costs can increase significantly for international schools, which can charge between $18,000 to $30,000 annually.

When it comes to tertiary education, the costs rise considerably.

Local universities like the National University of Singapore (NUS) or Nanyang Technological University (NTU) charge tuition fees ranging from $8,200 to $28,000 per year, depending on the course of study.

Polytechnic fees are lower, around $2,900 per year for citizens, but still represent a significant investment.

If you’re considering overseas education, the costs can be substantially higher.

These figures highlight the importance of starting to save early and considering various investment options to meet these substantial expenses.

By understanding and planning for these costs, you can ensure that your child has access to the best possible educational opportunities, both in Singapore and abroad, without facing financial strain.

Available education grants, scholarships, and bursaries in Singapore

University Tuition Grant

The University Tuition Grant is a substantial financial aid initiative offered by the Singaporean government to help students manage the cost of higher education.

Administered by the Ministry of Education (MOE), this grant significantly reduces the tuition fees for students enrolled in local universities.

Singaporean citizens are eligible for the highest level of subsidy, followed by permanent residents and then international students.

The grant covers a large portion of the tuition fees, easing the financial burden on families.

Tuition Fee Loan Scheme

The Tuition Fee Loan Scheme is designed to provide students with the financial means to pursue their higher education without the immediate burden of tuition fees.

This scheme, available to both local and international students at Singaporean universities, allows students to borrow up to 90% of their subsidised tuition fees.

Administered by local banks such as DBS, the loan is interest-free during the period of study, with repayment starting only after graduation.

The flexible repayment terms and generous borrowing limits make this an attractive option for students who need financial assistance but prefer to manage their educational expenses independently.

CPF Education Scheme

The CPF Education Scheme enables Singaporean students to use their parents’ or their own Central Provident Fund (CPF) savings to pay for tuition fees at approved educational institutions.

This scheme allows the use of up to 40% of the CPF Ordinary Account savings for educational purposes.

It provides an alternative source of funding, reducing the need for traditional loans or out-of-pocket expenses.

Students who benefit from this scheme are required to repay the amount used, with interest, to the CPF account holder’s Ordinary Account, starting one year after graduation.

This repayment helps replenish the CPF savings, ensuring that the funds can continue to support retirement needs in the future.

Bank Study Loans

Bank study loans are a popular option for students in Singapore who require additional financial support to cover their educational expenses.

Several banks, including DBS, OCBC, and UOB, offer study loans tailored to the needs of students.

These loans typically cover up to 100% of tuition fees.

The interest rates for bank study loans are generally competitive, and repayment terms are flexible, allowing students to begin repaying the loan after they have graduated and started working.

This makes bank study loans an accessible and practical solution for students who need financial aid to complete their education.

Edusave Account

The Edusave Account is a government initiative aimed at supporting the educational needs of Singaporean students.

Every Singaporean child aged 7 to 16 receives an Edusave Account, which is automatically credited with annual contributions from the government.

The funds in this account can be used to pay for approved enrichment programmes, co-curricular activities, and school fees.

This initiative ensures that students have access to resources that enhance their learning experiences, regardless of their family’s financial situation.

Edusave Awards

Edusave Awards are given to recognise and reward students for their academic achievements, good conduct, and other contributions to their schools and the community.

These awards include the Edusave Merit Bursary, Edusave Good Progress Award, Edusave Awards for Achievement, Good Leadership and Service (EAGLES), and Edusave Character Award.

The financial awards vary depending on the specific award and the student’s level of education.

For example, the Edusave Merit Bursary provides up to $500 for primary school students and up to $800 for secondary school students.

These awards not only offer financial incentives but also encourage students to strive for excellence in both academics and character development.

PSEA Account

The Post-Secondary Education Account (PSEA) is a savings scheme established by the Singapore government to help parents save for their children’s post-secondary education expenses.

Funds in the PSEA can be used to pay for approved programmes at various educational institutions, including polytechnics, universities, and technical institutes.

The account is automatically opened for eligible students, and contributions come from unused Edusave funds and government top-ups.

Parents can also transfer their own CPF savings into the PSEA.

The PSEA is a versatile tool, covering a wide range of educational expenses such as tuition fees, enrichment programmes, and overseas study expenses.

By providing a dedicated savings account for post-secondary education, the PSEA helps families manage and plan for the financial demands of higher education more effectively.

Kindergarten Fee Assistance Scheme

The Kindergarten Fee Assistance Scheme (KiFAS) is a financial aid programme designed to help low- and middle-income families in Singapore afford kindergarten education for their children.

Administered by the Early Childhood Development Agency (ECDA), KiFAS provides subsidies for children attending kindergartens registered with the agency.

The amount of assistance depends on the household income, with higher subsidies available for families with lower incomes.

For instance, families earning a gross household income of $6,000 or less per month may receive substantial fee reductions, making quality preschool education more accessible.

KiFAS not only helps alleviate the financial burden of kindergarten fees but also ensures that all children, regardless of their economic background, have access to early childhood education that is crucial for their development.

Mendaki Fund

The Mendaki Fund is a community-driven initiative that supports the educational needs of the Malay/Muslim community in Singapore.

Administered by Yayasan Mendaki, a self-help group, the fund provides financial assistance to students from low- to middle-income families to ensure they have access to quality education.

This assistance comes in various forms, including bursaries, scholarships, and loans for students at different educational levels, from primary school to tertiary education.

The Mendaki Fund also supports programmes that enhance students’ academic performance and personal development.

By alleviating financial pressures, the Mendaki Fund plays a crucial role in helping students achieve their educational aspirations and improve their socio-economic status.

Of course, there is also the CDAC and SINDA funds you can check out too.

Check with Your Child’s School

When planning for your child’s education, it’s essential to explore all available resources, including those offered directly by your child’s school.

Schools often have their own set of financial assistance programmes, scholarships, and bursaries to support students in need.

These can range from fee waivers and subsidies to grants for extracurricular activities and educational trips.

Additionally, schools may have partnerships with external organisations and charities that provide further financial support.

It’s advisable to regularly check with your child’s school for updates on available programmes and to discuss any financial concerns with the school administration.

This proactive approach ensures you are fully aware of all the support mechanisms in place to help manage your child’s educational expenses.

How do I plan for my child’s education savings?

1. Is your child going to study locally or overseas?

One of the first steps in planning for your child’s education savings is to decide whether they will study locally in Singapore or pursue their education overseas.

This decision significantly impacts the amount of money you need to save.

Studying locally can be more cost-effective due to the availability of government subsidies and grants for Singaporean students.

Additionally, living expenses are generally lower when your child stays at home.

On the other hand, overseas education can offer diverse experiences and opportunities but comes with higher tuition fees and living costs.

It’s crucial to weigh the benefits and costs of both options carefully, considering factors such as the quality of education, the specific needs and interests of your child, and your family’s financial situation.

2. How much do tuition fees currently cost?

Understanding the current tuition fees for different levels of education is essential for effective planning.

In Singapore, tuition fees for local universities such as the National University of Singapore (NUS) and Nanyang Technological University (NTU) range from $8,200 to $28,000 per year, depending on the course of study.

Polytechnics charge approximately $2,900 per year for citizens.

These figures are relatively manageable with proper planning and the use of available financial aids such as the University Tuition Grant and CPF Education Scheme.

For me, I utilised the tuition grant to reduce my university fees to about $8,000/year.

I also used my PSEA and some CPF funds to reduce it to $16,000 in total, of which I took a loan to pay for.

For overseas education, the costs can be significantly higher.

3. How much will tuition fees cost after inflation in X years?

When planning for your child’s education, it is crucial to account for inflation, as tuition fees are likely to increase over time.

Inflation can significantly impact the total amount you need to save, making it essential to estimate future costs accurately.

By accounting for inflation in your savings plan, you ensure that you are adequately prepared for the rising costs of education, helping you avoid financial shortfalls when the time comes for your child to pursue higher education.

To calculate the future cost of university tuition fees considering inflation, you can use The Financial Toolkit to do so:

The Financial Toolkit will take into account how long your child has before he/she starts university, the course duration, and the education inflation rate.

This will give an accurate estimate of how much your child’s university fees will be when the time comes.

4. Spend time researching grants, bursaries, and scholarships

By researching and applying for these grants, bursaries, and scholarships, you can significantly reduce the financial burden of your child’s education.

Each scheme has its own eligibility criteria and application process, so it’s important to review the specific requirements and deadlines carefully.

Taking advantage of these financial aids not only makes education more accessible but also ensures that your child can focus on their studies without financial stress.

5. How much more do you have to save?

Suppose you determine the total cost for your child’s education, considering all stages and inflation, is around $300,000.

Subtract your current savings and any expected grants, bursaries, and scholarships from this total.

For example, if you have already saved $50,000 and expect to receive $30,000 in financial aid, you will need to save an additional $220,000.

To reach this goal, divide the amount you need to save by the number of years until your child starts each education stage.

This will give you a clearer picture of how much you need to save annually or monthly.

6. Adopt proper budgeting techniques

Effective budgeting is essential to ensure you can meet your savings goals for your child’s education.

For me, I like to use The Financial Toolkit to track all my expenses:

I then find ways to cut down on unnecessary expenses, reallocating my money, and finding ways to grow the child’s education fund.

Having a dashboard to tell me what percentage of where my money goes to helps me prioritise what needs to be cut down:

Let’s say I decide to adopt the 50/30/20 budgeting rule, then I’ll adjust my expenses accordingly by just looking at my Financial Toolkit dashboard.

7. Save or invest the rest

The next step is to decide whether to save or invest the remaining funds.

Both saving and investing have their merits, and the best approach often involves a combination of both strategies, depending on your financial goals, time horizon, and risk tolerance.

Saving is typically a low-risk strategy that ensures your funds are secure and readily available when needed.

Investing typically involves higher risk but offers the potential for greater returns, making it suitable for long-term education planning.

The optimal strategy often involves a mix of saving and investing to balance safety and growth:

For education expenses due within the next few years, focus on low-risk savings options to ensure the money is available when needed.

For longer-term goals, investing can help your funds grow and keep up with inflation.

If you are risk-averse, allocate a larger portion of your funds to savings accounts and fixed deposits.

If you are comfortable with risk, consider allocating more to investments like stocks and mutual funds.

By strategically saving and investing, you can effectively build a robust education fund for your child, ensuring they have the financial resources needed for their academic journey.

Regularly review and adjust your strategy based on changes in your financial situation and market conditions to stay on track toward your goals.

I wrote about how you can save and invest for your child here.

Here are some savings & investing options for your child’s education

Endowment Plans

Endowment plans are long-term savings policies that provide a guaranteed payout upon maturity or in the event of the policyholder’s death.

These plans are particularly popular for education savings because they offer a combination of savings and protection.

By contributing regular premiums over a set period, you accumulate a lump sum that can be used for your child’s education.

The payout from endowment plans typically includes the sum assured plus any bonuses that have been declared over the policy term.

This makes them a reliable option for parents looking to secure their child’s educational future while also providing a safety net in case of unforeseen circumstances.

Here’s my post on the best endowment plans for your child’s education.

Short-Term Endowment Plans

Short-term endowment plans are similar to traditional endowment plans but with shorter maturity periods, typically ranging from 2 to 3 years.

These plans are designed for parents who need to build up education funds quickly or who prefer not to commit to long-term policies.

Short-term endowment plans offer a guaranteed return on your investment over a shorter period, making them suitable for immediate or near-future educational expenses.

The shorter duration means that the funds will be available sooner, which can be useful for covering costs associated with preschool, primary, or secondary education.

Additionally, these plans often come with lower overall premiums compared to long-term endowment plans, making them more accessible for families with tight budgets.

However, the trade-off is that the potential bonuses may be smaller due to the shorter accumulation period.

Nonetheless, short-term endowment plans provide a balanced approach to saving for your child’s education by offering both security and liquidity.

Here’s a post where I covered what I think is the best short-term endowment plan.

Robo Advisors

Robo advisors are a modern, technology-driven solution for investing in your child’s education.

These digital platforms use algorithms to create and manage a diversified investment portfolio tailored to your financial goals and risk tolerance.

One of the key advantages of robo advisors is their low cost compared to traditional financial advisors.

They typically charge lower fees, making them an attractive option for parents looking to invest for their child’s education without incurring high costs.

Robo advisors offer convenience and ease of use, allowing you to set up and monitor your investments online.

They also provide automated rebalancing, ensuring your portfolio remains aligned with your investment strategy over time.

This hands-off approach can be particularly beneficial for busy parents who may not have the time or expertise to manage investments actively.

Popular robo advisors in Singapore, such as StashAway, Syfe, and Endowus, provide tailored portfolios that can help you grow your education fund efficiently over the long term.

I use and highly recommend Syfe if you’re going the robo advisor route.

Get Professional Help

While digital solutions like robo advisors are convenient, seeking professional help from a financial advisor can offer a personalised approach to planning your child’s education savings.

Financial advisors can provide tailored advice based on a comprehensive assessment of your financial situation, goals, and risk tolerance.

They can help you navigate the complexities of various savings and investment options, including endowment plans, short-term endowment plans, and other investment vehicles.

Professional advisors bring a wealth of experience and can offer insights that might not be immediately apparent through online platforms.

They can assist in creating a holistic financial plan that includes education savings, retirement planning, and other financial goals.

Moreover, they can help you adjust your plan as your circumstances change, ensuring that your investment strategy remains effective over time.

If you decide to go the financial advisor route, we partner with unbiased financial advisors to help you with this – one of the backbones of Dollar Bureau and something I pride on promoting.

Conclusion

Planning for your child’s education is no small feat, but it’s essential to ensure they have the best opportunities for their future.

We’ve covered the importance of education planning, from understanding costs and accounting for inflation to exploring various savings and investment options like endowment plans, short-term endowment plans, and robo advisors.

We also highlighted the available grants, bursaries, and scholarships to ease the financial burden.

Remember, a mix of proper budgeting, smart savings, and strategic investments can make a significant difference.

Whether you choose to save or invest, what matters most is starting early and staying consistent.

Feeling a bit overwhelmed or unsure where to begin?

Don’t worry; you’re not alone.

If you have any questions or need personalised advice, we’re here to help.

Reach out to one of our financial advisor partners for a free consultation.

They can guide you through the process and help tailor a plan that fits your unique needs.

Click here to talk to a financial advisor.