Today (29th June) HSBC release the initial findings of its annual “Value of Education” report series. The report covers the ambitions and attitudes of parents in 15 countries and territories around the world, and reveals a strong focus among parents on postgraduate education and the development of soft skills that help to enhance their child’s career progression.
This is particularly prevalent across Asia, where parents are also ahead of the pack when it comes to having confidence in their child’s future prospects. Parents in Asia also spend the most and are more likely to be willing to make personal and financial sacrifices to support their child’s education from primary school through to post graduate studies.
- Parents in Asia, particularly India and China, are among the most optimistic that their child has a bright future (87% and 84% respectively vs. 75% global average). In contrast, parents in countries including France, the UK and Australia are more cautious
- The trend is similar looking at how confident parents are about their child getting top grades in their exams, and that they will get a good job
- However, while many parents are disappointed if their child doesn’t get top grades, the vast majority (86%) feel that education should provide a blend of both academic and vocational training and (43%) believe that vocational education is more likely to suit their child – suggesting the focus of education is on employability rather than pure academic achievement
- Most parents (78%) now see a postgraduate degree as an important gateway for their child to get full-time employment in their chosen occupation. Parents in China (91%), Indonesia (91%) and Mexico (90%), are most likely to consider a postgrad for their child, compared with only 58% in the UK
- The most favoured university courses across all countries are medicine (13%), business, management and finance (11%), and engineering (10%)
- Activities which develop their child’s soft skills and open up opportunities to work overseas are also strongly favoured – for example, 85% think it is important that their child gains ‘real life experience’ by travelling or volunteering, and 79% mastering a foreign language
Parents are spending an average of USD 44,221 on their child’s education from primary school up to university undergraduate level, according to Higher and higher, HSBC’s new report in The Value of Education series. Of the over 8,400 parents in 15 countries and territories surveyed, parents in Hong Kong (USD 132,161), followed by the UAE (USD 99,378) and Singapore (USD 70,939), contribute the most towards all aspects of their child’s education costs, including school/university tuition fees, educational books, transport and accommodation.
The majority of parents (87%) contribute towards the cost of their child’s initial stage of education, with 85% also contributing towards their university or college education. Apart from student loans, only 15% of students in tertiary education contribute towards funding their own education, while 16% benefit from government/state support (via a scholarship, sponsorship, bursary or grant) and 8% from similar school or university support.
PATH TO SUCCESS
When thinking about the courses they would like their child to study at university, parents show their ambition. Medicine (13%), business, management and finance (11%), and engineering (10%) are the most preferred. In addition, more than nine out of 10 (91%) parents are considering postgraduate education for their child, and 76% of these expect to contribute to the cost. Almost eight in 10 (78%) parents think completing a postgraduate degree is important for their child to get full-time employment in their chosen occupation. The importance of a postgraduate degree to their future job prospects is even more widely recognised among parents in China (91%), Indonesia (91%) and Mexico (90%).
Parents in Asia are most likely to be optimistic about their children fulfilling their potential. While 75% of parents worldwide are confident their child will have a bright future, they are 87% in India and 84% in China to say so. In contrast, parents in France are more cautious, with only 42% being confident of a bright future for their child. Similarly, 85% of parent in India and 78% in China feel confident their child will get a great job, compared to global average of 68%. In France, only 36% of parents feel confident their child will get a great job.
Commenting on the findings, Professor Colin B. Grant, Vice President (International), University of Southampton, said: “The distinctive, knowledge-based economies of several Asian countries create huge demand for high quality, highly employable graduates. This also includes places with relatively small populations such as Singapore, Hong Kong, and Taiwan, where high fliers are focused on developing international skills and experiences to give them a real competitive advantage.
“Parents play a crucial role in shaping their children’s success through their high expectations, but also by making dreams a reality through their willingness to financially support their child’s education up to postgraduate level. Traditional careers advice has its place but the influence of peers and parents is also crucial. Children are increasingly looking at information available on line, social media, and taking on board the views of their friends. Parents' ideas and ambitions can also be a strong factor in some cultural contexts.
“The drive to achieve success also shines through in the clear preference towards STEM (science, technology, engineering and mathematics) and business/finance university courses – subjects where demand for highly skilled experts, and their value in the employment market, is set to continue to rise in the coming years.”
He also added: "There's not really a global rule of thumb when it comes to STEM, particularly when you factor in different demographics and cultures. Also, the STEM - non-STEM divide is becoming less marked as jobs require digital literacy and employers worldwide require candidates to have both hard and soft skills. It's becoming clear that future employability will depend on a range of different literacies across the disciplines, many of which were once separate."
While parents are willing to support their children to help them get ahead in their careers, many are not planning ahead by saving to meet the significant costs associated with their child’s continuing education. Typically, tuition fees for a two-year postgraduate degree in engineering can be USD 26,400 in UAE, USD 21,000 in the USA and USD 19,700 in Australia.
Nearly three-quarters of parents (74%) are using their day-to-day income to help fund their child’s education, while nearly a quarter (22%) admit they don’t know how much is contributed each year. Many parents are making or have made financial sacrifices including reducing their spend on leisure activities (40%), working longer hours in their existing job (21%), contributing less to their own long-term savings or investments (20%) and taking on a job/second job (18%) to help fund their child’s education. Additionally, 82% of parents are ready to make personal sacrifices for their child to succeed.
Parents in China are the most financially prepared, with over half (55%) funding their child’s education through general savings, investments or insurance, and over two-fifths (43%) through a specific education savings plan. In contrast, less than one in 10 parents in the UK (5%), Australia (8%) and Mexico (8%) are funding their child’s education through a specific education plan.
Charlie Nunn, HSBC’s Group Head of Wealth Management, said: “While parents recognise that educating a child can be expensive, it is easy to underestimate the full and long-term costs. Parents in China are the best prepared when it comes to financial planning, however internationally many parents are not planning ahead leaving them in danger of neglecting other priorities to help their child reach their full potential. In nine of the 15 countries surveyed, paying for their child’s education is most likely to be parents’ biggest financial commitment, above others such as mortgage/rent payments and household bills.
“To limit the strain that children’s education can have on family finances, it’s important to plan and save ahead. Seeking professional advice can help parents make more informed choices and develop a longer term financial plan.”