Every parent wants to give their child the best start in life – a quality education, a stable future, and the freedom to pursue their passions. But with education inflation outpacing general inflation, how can families ensure they’re financially prepared for the rising costs of schooling and university?
“Education is one of the biggest financial commitments a family will ever make,” says Marius Pretorius, Head of Marketing Retail Savings and Income at Old Mutual. “If parents don’t start planning early, the reality of paying for school and university can be overwhelming. The good news is that parents can prepare for these costs with the right tools and strategies without unnecessary financial strain.”
WHY EDUCATION COSTS KEEP RISING – AND WHY IT MATTERS
Unlike other household expenses, education inflation consistently outpaces general inflation, averaging 6% – 8% per year, according to Old Mutual’s latest education research. * This is due to rising operational costs, technological advancements, and increasing demand for quality education, particularly in private and tertiary institutions.
While everyday expenses like groceries, transport, and rent fluctuate, education costs have risen steadily for decades. Even during economic slowdowns, tuition fees continue to increase as institutions must cover fixed costs such as salaries, infrastructure, and resources. *
For parents, waiting to start saving isn’t just a delay – it’s a growing financial gap. Without a structured financial plan, the longer you wait, the harder it becomes to keep up.
WHAT DOES EDUCATION COST?
Based on Old Mutual’s latest research, parents can expect to pay:
- Public high school fees: The average annual fee for top-tier public high schools (Quintile 5 schools) is R36 238, with annual increases of 7.5%.
- Private high school fees: Standard private schools charge an average of R79 321 per year, while premium independent schools exceed R174 862 annually.
- University tuition: Fees vary by field of study, with a Bachelor of Arts costing between R45000 and R75,000 per year, and Bachelor of Engineering or Medicine degrees ranging from R80 000 to R160 000 per year.
- International university fees: Costs for studying abroad have risen by 25% – 30% due to exchange rate fluctuations, with top UK and US universities now exceeding R1 million per year, including living expenses.
“It’s important to remember that because of educational inflation, these figures will look very different in five years from now, and even more so in a decade,” says Pretorius. “Many parents feel there’s still plenty of time to plan, but due to educational inflation, early preparation makes all the difference in staying ahead of rising costs.”
THE POWER OF STARTING EARLY
Here’s why an early start gives parents a much better chance of securing the education they dream of giving their children:
- Compound growth works in your favour – The earlier you start, the more time your money has to grow.
- Smaller monthly contributions are easier – Saving over 10 to 15 years makes it easier to stay on track, rather than trying to save large amounts later.
- You avoid unnecessary debt – Loans mean you’ll pay back far more than you borrowed.
“For example, saving just R1 000 per month from birth could result in over R500 000 by the time your child starts university, assuming a modest 8% return,” Pretorius explains. “That could prove the difference between covering tuition upfront or taking on a major financial burden, like a study loan, later.”
TOOLS TO HELP YOU PLAN SMARTER
To help parents take control of their education savings, Old Mutual provides a range of free digital planning tools:
- The ‘Cost of Education’ Calculator – Helps you forecast the future cost of school or university based on inflation trends.
- The ‘How Much to Save’ Calculator – Calculates how much you need to save monthly to reach your goal.
- The ‘Savings vs. Loans’ Calculator – Compares the long-term impact of saving now versus taking out a loan later.
- The ‘Pay Yourself First Calculator’ – Helps you to make room in your budget for educational savings.
You don’t have to be an Old Mutual customer to use these tools; they will help you understand exactly what you need to do today to avoid financial stress later.
SECURE YOUR CHILD’S FUTURE Today
Funding your child’s education is one of the most important financial commitments you’ll make. Starting early allows you to spread out savings over time, making it easier to manage monthly contributions while reducing the need for loans in the future. The earlier you begin, the more you can take advantage of education-specific savings options and investment growth to stay ahead of rising costs.
You don’t have to navigate this alone. A financial adviser can help you create a personalised savings plan that aligns with your budget and long-term goals, ensuring your child’s education remains within reach.
Use Old Mutual’s Cost of Education Calculator to estimate how much you’ll need to save. Or call 0860 66 66 59 to speak to a financial adviser for expert guidance on structuring a plan that works for you.
Sources:
*2021 Financial Planning for Parents; True Love magazine, June – July issue.
**The Research Lamppost, 2024, OML Education Options Planning for Your Child’s Future report.
Disclaimers
Investment strategies are taken at their target midpoint. CPI (Consumer Price Index) or inflation is set at 5% per year. Education inflation has been set at 7%. Although tuition fees were sourced during research, these figures can vary from year to year.
Old Mutual Life Assurance Company (SA) Limited is a licensed FSP and Life Insurer.
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