Educational costs are one of the core components of a long-term financial plan for many expatriates with children, grandchildren or family members, whether they intend to study in their home country or a new overseas location.
Foreign nationals are strongly advised to conduct thorough research into the university fees structure in their chosen destination to ensure they have budgeted appropriately and adjusted their investment strategy accordingly.
Let us explain the contrasts between higher education charges for international students and provide advice for providing financial support.
The Difference Between Home and Overseas University Costs
A common misconception is that education fees apply across the board – this is not the case. Educational institutions normally have two sets of charges, adjusted for domestic students and foreign nationals – the costs will differ between publicly funded and private establishments.
Fee status criteria are governed differently depending on the applicable educational regulations and whether your family member is studying a higher education course (such as a degree) or a further education course (such as an NVQ). It is important to understand fee structures because most countries have similar rules, and much depends on the residency status of the student.
Being a British citizen does not necessarily mean that home fees apply.
Foreign nationals (or citizens treated as overseas residents) are not permitted recourse to public funds and must pay the correct educational charges to comply with their immigration conditions.
Students who have spent time overseas may also not be eligible for student loans. The UK Council for International Student Affairs (UKCISA) provides further information about educational costs for British universities – note that the comparable body is the best source of information for other countries.
Average Costs of a British University Education
UK universities charge an average of between £3,500 and £18,000 a year for overseas students, increasing every year in line with inflation.
There are specific courses in high demand, or at prestigious universities, which cost considerably more, for example:
- Overseas fee-payers studying Medicine at Cambridge University pay charges of £350,000.
- An Engineering or Science degree at a top university costs around £130,000 or £90,000 respectively.
- Attending Oxford University costs from £27,840 and £39,010 a year for an overseas student, depending on the course and duration.
These costs are markedly more than the capped rate for home students, restricted to £9,250 a year.
Qualification Criteria for UK Home University Charges
For a child or relative to be eligible for home university fees in Britain, they must be a UK citizen or have permanent immigration status and be ordinarily resident in the country.
This factor is the stumbling block for many expatriates who live with their children overseas during their high school education and plan to send them to a respected UK university for their ongoing studies. Most children with expatriate parents will pay the same tuition charges as an international student, regardless of their British passport, if they have spent over six months of the year living in a different country.
A temporary or renewable visa status overseas does not qualify a student for home fees, nor does owning a UK property or having university fees paid by a relative who is ordinarily resident in Britain. This may mean that expected university costs are significantly lower than the actual expense, which is why planning early is so important.
Budgeting for future educational fees is the best way to prepare and have the financial stability to send family members to the establishment of their choice without having limited options due to the higher fee structures applied.
Financing UK University Fees as an Expatriate
Many expatriates set aside a provision within their wealth management plans or investment portfolio to provide an excellent education for family members who remain in the UK, or intend to return.
The complication is that British university fees are payable in GBP, so the funds or products earmarked to cover this cost should normally be in the same currency to avoid exchange risks. We have provided more guidance about this factor in our early publication, explaining The Importance of Currency Fluctuations.
Students embarking on university education in the UK with financial support from overseas parents can certainly finance their course costs in this way. Still, there are other costs to account for aside from the course fees, such as:
- Living and travel expenses
- Boarding fees
- Course materials
The average living cost per year for an undergraduate is around £10,000. This estimate is conservative for students attending universities in more expensive areas such as London or needing to finance private rental accommodation.
Setting aside an education savings fund such as a low-risk investment product or savings account is a sensible way to ensure you can finance the relevant costs. Whichever type of fund you select should provide future growth potential without excessive risk exposure that could reduce the value available.
Ongoing fund management is also important to ensure your savings stretch as far as they need to and that your anticipated returns are sufficient to cover increases in education fees year on year.
Expert Support With Education Fee Planning for Expats
There is a fine balance between selecting a fund with secure returns over and above forecast inflation rates and choosing a financial strategy that protects your wealth to ensure you can comfortably cover all the costs associated with a world-class university education.
At Chase Buchanan, we recognise that planning for your child’s future is an exceptionally important element of wealth management. It is impossible to put a price on life opportunities and a degree from a globally recognised university. Taking action now and being prepared for the true potential costs of tuition is the best way to minimise financial risk, while understanding the complexities of fee structures and qualification criteria.
Please download our complimentary Education Fee Planning Guide for more information about investing for tuition fees, or contact Chase Buchanan for professional support in structuring a suitable financial strategy.