The worse the economy gets, the more tuition fees "increase"?
Lorraine Leung, Senior Financial Planning Manager, CentaWealth Asset Management Limited
I recently read a report that the local Education Bureau received applications from several private and international schools to increase tuition fees, with increases ranging from 12.6% to 24.9%...
When I read this report, I immediately remembered a relative complaining to me recently. She said her 14-year-old son was studying at a local international school, and she had originally planned to send him to the United States for further study in three years, having already prepared the education fund. Unexpectedly, she heard from other parents that her preferred American college would increase tuition fees, and by a whopping 60%, from HKD 250,000 to HKD 400,000 per year!
Isn't the US economy still in a downturn? What's the justification for such an increase?
It turns out, according to research, economic factors do indeed have a significant impact on tuition fee adjustments by universities. But the problem is: the worse the economic environment, the higher the unemployment rate; at the same time, the unemployed, with no work, will shift their focus to improving their professional skills and knowledge to fully equip themselves, so that when the economic environment improves, they can increase their chances of employment. This leads more people to choose to return to school during an economic downturn. Therefore, the demand for degrees also rises sharply, so how can tuition fees not follow suit?
This phenomenon is not only happening in the US; many European countries have also recently experienced credit crises. If the economic recession continues, it is not difficult for the above situation to also occur.
Furthermore, in addition to local students, the new forces from mainland China cannot be ignored. The proportion of Chinese students studying abroad is currently rising at a rapid rate. Coupled with the "one-child policy" implemented in China, parents tend to focus on nurturing their only child, and are even more reluctant to cut back on the cost of studying abroad. Even if tuition fees are expensive, most parents will unhesitatingly let their children go abroad to broaden their horizons and receive the best quality education.
Next time, I will share some quality options for saving for education funds with all parents!
If you have any questions, please feel free to contact me at lorraine.leung@centawealth.com!