Our children deserve better

THE GIRL NINJA

Liza Gaspar

(Third part of a series)

In the previous column, we answered the following questions: Where will he or she study?

When will he or she go to college? While we will answer the following questions in this article which is the last part of a series of 3 articles on planning and saving for our children’s college fund. How much will you need to send her to his or her college of choice? How do you save for this amount?

How Much Do You Need

First, let us compute for the yearly expenses of sending a child to college.Let us assume that the child is going to start college in the coming academic year. We will adjust for inflation rate in the next computation. We need to collect the amount for each of the following items. Don’t forget to compute for the yearly amount.

This includes tuition fee, books and school supplies, dormitory rental, food allowance and money for school activities such as field trips.

This amount is dependent on what course your child will eventually enroll at. For example, if she plans to study hotel management, then she will probably join a lot of class field trips including out of the country trips which are pricey and she has to have pocket money, technology tools like cell phone and load, tablet, laptop or personal computer.

Second, we adjust the figure we computed above for inflation rate.  Inflation rate is the rate with which prices of products increase from year to year. For example, in January 1 of last year the price of a kilo of sinandomeng rice was P40 while it was P41.20 in December 31. Then we can say that the price of sinandomeng rice increased by P1.20 which is equivalent to a 3% (P1.20 divided by P40) inflation rate.

In the country, the National Statistical Coordination Board chose several products including rice to kerosene to monitor. The changes in the prices of these products (in economics and statistics parlance, these products are referred to collectively as basket of goods) are the basis for the computation of the inflation rate we often here on televisions and radios and read in newspapers.

The 2013 inflation rate according to NSCB is 3% which means that in general the prices of goods from January 1, 2013 and their prices in December 31, 2013 increased by 3%.

However, schools often increase tuition fees at a rate higher than the inflation rate. Some even increase tuition fees every year for as much as 10%.

For example, today the parent of a child studying at the University of the Philippines needs to pay as much as P30,000 per semester for tuition while my mother paid less than P5,000 when I was there more than a decade ago.

Let’s go back to my imaginary child, Ella. Assuming that for Expense Item Numbers 2 to 7 above, my estimate of the total if she’s going to college NOW is P690,000*. Remember this amount is what I would need if Ella is going to college now.

This means that we need to adjust this figure for the inflation rate. Let’s use this formula.

Formula 2

For Ella, in 13 years, I need about P1,013,288 for her other expenses during her first year. This amount will again increase by the inflation rate each year until she finishes college. The figure below summarizes the estimated other expenses for 4 years.

  

Based above, I will spend P4,239,220 for Ella’s other expenses for her entire stay in school. Adding this to her total estimated tuition fee, we learn that to send Ella to the college of her choice, I will spend a total of P5,945,971! No wonder some people don’t want to have kids these days.