Oran Hall | Options for financing tertiary education

Tertiary education is one key that can very effectively open the door to a successful life marked by, among things, a good and satisfying career, a good standard of living, and the ability to contribute significantly to the needs of the less fortunate. But it costs, and many do not have the means readily to secure it.

There are several ways to fund tertiary education. They include the student’s personal funds, financial support from the family, scholarships, grants, and bursaries.

Personal funds can be funds from the person’s savings and investments, income from full-time employment earned during the course of study, and income from temporary or short-term employment during the course of study. Financial contributions of family members may include cash and proceeds from insurance, savings, and investment products specifically created to fund education.

The approach best suited to an individual depends on the type of course and its duration and cost, the individual’s location relative to where the programme is offered, the individual’s family situation, employment status, and the capacity to qualify for financial support in competitive situations such as scholarships and bursaries.

To generate personal funds, some people defer the start of their full-time tertiary education, preferring to work and save towards the cost of their education either in full or in part. Some prefer to do the entire course part time if the educational institution allows it, while others transfer to full time. Others study online while working. The primary drawback of these approaches is the added time it will likely take to complete the course of study.

Family support is vital to many students. In some cases, family has the means to fund the course of study comfortably, but some families must establish a programme to accumulate the funds. There are several investment vehicles that can be used: bonds, stocks, unit trusts, and mutual funds.

A careful balance has to be struck between growing the funds and preserving them. Financial markets fluctuate, so some types of instruments can depreciate in value, for example, stocks and unit trusts and mutual funds that invest for capital appreciation. It is good to diversify the portfolio to achieve some growth and earn income while preserving capital values.

Beyond the traditional investment instruments, life insurance companies and credit unions may also have products that aim to generate funds for meeting needs like education funding.

Scholarships and bursaries are not plentiful and are not necessarily open to the entire population. Some are granted by groups which restrict eligible candidates to clearly defined groups, for example, the children of their employees or of members of their church.

Generally, though, the candidates most likely to qualify are those who satisfy specified minimum educational requirements. One other source of funding is grants, often provided by companies, individuals, and trusts, for example. The onus is on interested students to look out for these facilities and apply early, but it must be borne in mind that additional funds are generally required to meet the full cost of the course.

Short-term or temporary employment arrangements generally generate money, which is useful but not enough to cover the major share of the cost of the course of study. These arrangements include employment offered by businesses, the Government, and some educational institutions, generally during the holidays. There is a form of short-term employment, though, that enables students to earn enough to cover all or most of the cost of education for a year. This is the Work and Travel programme, which allows qualified students from many countries to travel to the United States for up to four months to learn about other cultures, but very importantly, to work and earn towards the cost of their education.

The Work and Travel programme is very popular with Jamaican students because participants are able to earn enough to cover a substantial portion of the cost of their education. The major universities are able to provide useful information to interested students through their placement and career units. For example, they can provide a list of agents that are approved. They are an important link between the students and the system in the USA.

The agents perform several functions. They host sensitisation sessions to introduce the students to what to expect in the host country and to share information on the employer. They ensure that the students’ documents are properly processed before they depart, that they are placed in a job before they depart, that suitable housing arrangements are in place, that insurance is in place, and that the employers and host country are aware of their arrival and departure dates.

The onus is on the students to do their own research before choosing an agency and to read all contracts carefully before signing.

The last resort is loans, whether from the Students’ Loan Bureau or financial institutions. The major issue with this facility is cost, that is, the interest that borrowers are required to pay on loans, which can be challenging in the early days of the borrower’s working life.

There are many ways to finance tertiary education. Students are responsible for choosing what suits them best after giving consideration to the available options and must prepare themselves to qualify for what is available.

Oran A. Hall, author of Understanding Investments and principal author of The Handbook of Personal Financial Planning, offers personal financial planning advice and counsel.finviser.jm@gmail.com