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How do they save up for children’s education in different countries worldwide?

Most countries worldwide have free universal secondary education. However, no one can guarantee free higher education. The number of free places in the prestigious world universities is small and the competition is growing every year. How parents solve the problem of paying for their children's education in different countries will be discussed here.
How do they save up for children’s education in different countries worldwide?

There is an opportunity to get a free education in universities in many countries. These countries include Germany, Austria, France, Norway, the Czech Republic, Slovakia, as well as Italy and Greece. In some countries, free education can only be obtained if you study in the language of the country where you are applying. For example, it is the Czech language in the universities of the Czech Republic. But there are exceptions: in Norwegian universities, free education can be obtained in Norwegian or English. Studying at a public university in France and Germany, a student only has to pay an annual fee ranging from 100 to 500 euros.

In order to receive a free education, upon admission, you need to pass a special test for knowledge of the language of the country where you plan to enter. It is possible to enter Polish universities on a competitive basis, and foreigners of Polish origin are provided with scholarships.

USA

American universities are considered the most expensive in the world. The tuition fee of bachelor's program at a US university is from 19 thousand dollars a year. The average cost of living expenses, food, textbooks is from 11 thousand dollars a year. Most educational institutions do not consider students' documents for enrollment if the prospective student does not provide relevant documents that confirm the availability of financial resources to pay tuition and additional expenses for one year.

The quality of American higher education is recognized all over the world: American universities occupy half of the places in the top ten of almost any world university ranking. It is no wonder that 7 out of 10 students studied with borrowed money in 2020.

Most often, educational loans are taken by people from wealthy families (income more than 97 thousand dollars a year); they account for 34% of the total educational debt.

Interest rates for state educational loans are quite high: from 5 to 7.5%, (for comparison:  loan interest rates for real estate are only 4.3%). However, it is almost impossible to declare bankruptcy and stop paying off your student loan in the United States, although bankruptcy can allow you to stop paying debts for a car or housing.

There is a series of government programs that, in theory, should make student loan payments easier, but in practice they most often do not work. For instance, under the 2007 program launched by Bush Jr., part of the debt for education can be written off if a person works in the public service. During the program existence, 30 thousand people submitted their applications, but only 96 of them were satisfied.

United Kingdom

Great Britain is one of the world leaders in the field of higher education and science, and therefore its universities attract talented and ambitious students and teachers from all over the world. The British education system has a number of features that must be considered when choosing a university and program.

There is no unified system of financing education here.

Tuition fees loan (educational loan)

This type of loan will allow pay for grad days in British universities. The payment scheme for education is as follows: the organization that manages the loans pays directly to the educational institution the necessary funds every semester.

Tuition fees loan will generally cover the cost of studying at a public educational institution. However, there are restrictions on the loan amount, regardless of whether it is the first application for a loan or repeated one:

  • full-time study at a state university or college in England involves 9 thousand pounds sterling,
  • part-time study at a private university or college in England is £6,000.

Maintenance loan is a loan for maintenance

This type of loan covers all living expenses of a student at universities in England. By the way, investing in residential real estate in the UK by students is quite lucrative for renters. This loan is available only to full-time students enrolled in bachelor's degree program. As in the previous case, the loan is received every semester to the student's personal account.

Please note that these rates do not correlate with loans for educational institutions in Wales, Scotland, and Northern Ireland.

Finland

Finland is among the world leaders in the quality of education. There are 35 higher education institutions in this country.

Gifted students who study on a fee basis may qualify for scholarship. They can apply for university scholarship in parallel with the submission application. There is no tuition fee in higher education institutions in Finland, but students must pay for housing, food and other running costs. Finnish students are eligible for scholarships as well as bank loans at a low interest rate.

Japan

Due to the increase in the number of students seeking higher education but experiencing financial difficulties, the Japanese government launched a government scholarship program in 2017.

The JASSO program offers two types of student loans: interest-free and interest-bearing (up to 3%). The program without interest involves working for the state in certain regions of the country.

Russia

All these considerations make a responsible parent to think that they need to open a replenishable deposit on the day the baby is born, and keep it intact for 18 years. With a certain punctuality, one can just save up for their child’s education.

You can use insurance savings products instead of a deposit, they are just designed for this.

However, if your child is already, say, 14 years old, it is most likely too late to save money for education. Tuition fees in Russian universities amount to hundreds of thousands of rubles a year. (However, in addition to education, other needs may arise in the life of a grown child; savings are necessary in any case). It is simply not possible to accumulate these amounts in three or four years. In this case, apparently, it is necessary to take a subsidized loan for education: Russian banks have such a product.

Educational loan with state support can be obtained from banks by any citizen over the age of 14. No collateral is required to obtain a loan. In addition, the student (borrower) is granted a deferral for repayment of the educational loan during the grace period. The interest rate on the loan remains fixed for the entire term (up to 15 years) and amounts to 3%.

Kazakhstan

The State Educational Savings System has been operating in Kazakhstan for nine years since 2013. SESS provides a unique opportunity for all citizens of our country to save up in advance for their own or their children’s education by opening special AQYL educational deposits in second-tier banks. Not only bank remuneration but also the annual state premium is accrued on the deposit.

Bank interest is accrued on this educational deposit (depending on the bank), an annual state premium is added in the amount of 5-7% of the deposit amount. For example, if you have 100 thousand tenge in your educational deposit, then the annual premium from the state can be 5-7 thousand tenge, plus a premium from the bank. The larger the deposit amount, the larger the premium.

The insurance legislative amendments as of this year allow life insurance companies to cooperate with the SESS. Thus, educational life insurance guarantees the annual accrual of a state premium in the amount of 5% or 7% on the amount of accumulation under the insurance contract. The term and initial size of contributions are not limited by law. When receiving a grant, the insured has the right to: withdraw savings or reissue insurance for another child.

The main perk of this program compared to a bank deposit is the ability to save money for the child regardless of tricks of fortune or, in other words, own death. We are naturally talking about products that insure the client’s life in favor of their child. That is, in the event of the insured’s death, the LIC, despite the absence of further contributions must pay the child a predetermined amount specified in the contract.

Another advantage of SESS is the ability to save up to 10% on taxes on PIT adjustments. The fact of having an endowment insurance policy means that smaller amounts will be deducted from the salaries of LIC clients, and people will receive more money.

Photos are from open sources.

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