By André Wentzel, 21 November 2019
The belief among survey participants that a qualification improves employment prospects is backed up by data. Recently, South Africa’s number of broadly unemployed individuals exceeded 10 million for the first time. Research based on Statistics South Africa’s data shows that having a matric certificate doesn’t do much to improve work prospects. Only a degree, diploma or certificate really moves the needle.
André Wentzel from Sanlam says, “South Africans know this. Our findings reveal that in lower-income households especially, saving for education is in the top four monthly expenditure priorities. But, inevitably, there’s a shortfall between what people can save and the real cost of education in South Africa.”
He adds that accessibility is a political and societal question. Sharanjeet Shan, Executive Director of Maths Centre – a Johannesburg based non-profit organisation striving to improve maths, science and technology education in South Africa – agrees. She adds, “A nation is never built by a government but its citizenry, through wide, deep and intense education at all levels and in all spheres. A government’s role is to stand up to the challenge and focus on education fit for all purposes. South Africa is riddled with a myriad of oppressions, especially within schools and amongst the youth. If we do not educate our children and young people for the Fourth Industrial Revolution (4IR), we’ll face persistent issues with increasing numbers of displaced workers dependent on the state.”
A 2019 Statistics South Africa report based on 2017 data found that just 33.8% of young people aged 18 to 24 were attending educational institutions – only 11.6% were enrolled at tertiary education institutes. Over half of the youth said they couldn’t afford tuition. While Fees Must Fall was a catalyst for the introduction of free education for first year students, it still leaves the challenge of finding funding to complete one’s studies. For families earning just over R350 000 a year, who are currently excluded, there’s a big gap.
According to Stats SA, tertiary education costs increased by 6.2%, while secondary education costs increased by 6.8% in 2019; both higher than general inflation. According to data collected by Sanlam, a university degree costs approximately R48 000 – R52 000 per year on average for tuition. Of course, these costs vary considerably across institutions and depending on what degree is studied.
This means, on average, parents with a child starting primary school need to contribute approximately R20 000 per year in order to save the nearly R600 000 required to cover the tuition cost of an average four-year degree in 12 years’ time. Starting later means you’ll need to save more on a monthly basis. The required savings increase to nearly R50 000 per year if you only start saving when your child reaches high school.
Sanlam’s research showed that 67% of all participants are saving less than R20 000 for education a year. 86% of people with household incomes of under R10 000 save less than R20 000 per year for education. In the R10 000 to R30 000 income bracket, 63% of people save under R20 000 per year. In the +R30 000 group, this drops to 40%.
Wentzel says that it’s pivotal that parents are empowered to make saving as simple as possible. “Even saving small amounts adds up. We know South Africans are extremely aware of the benefits of education and how the world of work is changing. But it can be overwhelming worrying about what the best action to take is, especially as this may require great commitment.
So, it’s important that parents have the right tools to set goals and be in control of their savings plans. Our
Goal Manager solution enables this by calculating what you need to save for your educational goal and by helping you stay on track with your contributions to achieve this.”
Wentzel adds that it’s absolutely normal to feel overwhelmed by the sum you need to save to educate your child. “It’s important to know you’re not alone in this. I think the message needs to be that as a parent, you’re doing an amazing job if you’re managing to save for your child’s future studies. Even if it’s small sums at a time, these add up. The earlier you start saving and the longer you continue to save, the better. Have a plan in place, use a tool like Goal Manager to stay on track, and consider speaking to a financial adviser for support and advice.”