More parents saving earlier for kids' college education

By The Gleaner's Youth Link

Monday, March 17, 2014

More parents are taking the future costs of tertiary education seriously and are preparing for it, reports Scotia Jamaica Life Insurance Company Limited (SJLIC).

Referring to the growth in the subscription of the Heritage International Scholarship Trust Plan, Hugh Reid, president of SJLIC, reports that the message is getting through to parents that planning for higher education and saving for it incrementally over time is the best approach to providing their children with post-secondary education at their institution of choice.

"We are very encouraged with what we are seeing. The future of many young Jamaicans is on a very sound footing because of the foresight of their parents and guardians," said Reid, hinting at the growing level of participation in the Heritage Plan distributed by SJLIC.

SJLIC began distributing the Heritage International Scholarship Trust Plan in August 2011 and has seen growth of 240 per cent in sales of the plan over the last three months compared to the previous three months. The company, a subsidiary of the Scotiabank Group, has experienced 98 per cent persistency rate on all plans sold to date. This means that only two per cent of the parents who enrolled their children into the Heritage Plan have defaulted on their payments.

Long-term commitment

"Forward-thinking parents understand that preparing for higher education is a commitment made between them and their children. They recognise that honouring that commitment requires planning and saving over a medium- to long-term time horizon of between five and 18 years, based on the age of the child at the time of enrollment into the plan," Reid explained.

Heritage reports show that more than 10,000 families in Jamaica have already made that long-term commitment through the various distributors of the plan. Since 1996, Heritage International Scholarship Trust Foundation has paid close to US$10 million in savings and educational assistance payments (scholarships) to Jamaicans to assist with post-secondary education costs.

"The savings structure of the Heritage Plan has really empowered parents because it is flexible, secure and can be tailored to suit parents' affordability. They can start a plan with an amount that they can comfortably afford and increase as their financial situation improves. We have seen some parents make tremendous sacrifices to ensure that they put away a little every month to secure their children's future, and it pays off in the long run," Reid reassured.

Early start

SJLIC reports that parents are even starting to save from as early as when their children are newborns. According to the 2010 Economic and Social Studies Survey published by the Planning Institute of Jamaica, only 38.4 per cent of Jamaicans within the tertiary cohort (aged 20-24) were enrolled in colleges, universities and higher-level skills-training programmes.

"There is a direct correlation between higher education and earning potential, home ownership, and general upward mobility. We need to see the number of Jamaicans matriculating to tertiary training increasing significantly in order to empower young people to create more opportunities for themselves," Reid continued.

Research conducted by SJLIC also shows that the average cost of higher-level education in Jamaica has increased by 27 per cent since 1991. Since 2000, the average cost of both graduate and undergraduate degrees exceeded J$1.8 million and it is expected that over the next 10 years the average cost of a four-year undergraduate programme in Jamaica will increase to at least J$3.8 million This cost will be significantly higher for overseas universities.