I just finished discussing with a client thru YM on what are her options for an educational plan for her daughter Luna, one year old and turning 2 this July.
At first, we were discussing about figures, at 3k a month, how much will she get 15 or 16 years from now. And when I told her around 200k-500k, her next question struck me. She asked ‘Will that be enough for college 16 years from now? (a very educated question I must say). Oo nga naman, may tama xa. Yes, that’s true. Most of the time, we get retirement plans or education plans for some purpose that we don’t know the exact figures that we will need when that time comes.
So I told her, ‘Ok, since you’ve brought that up, let me prepare an extensive educational plan for Luna. So I asked her additional questions that will lead us to the question ‘Will that be enought for her education 16 years from now? Here’s what we got.
Here are the assumptions that we factored in.
– Luna will study a 4 year college course
– Luna will enroll in Ateneo De Manila University
– Luna will start college at the age of 17 which is 16 years from now
External factors that we add on the formula
– Tuition fee increases at the rate of 8-10% per year
– Tuition fee is almost equal to the miscellaneous expenses
– Average inflation rate is 6% per year
– No other existing fund or savings for education
Here are the constant figures in our computation.
Last 2008, PDI published an article ‘Cost of College Education: Do the math and weep and wonder‘. That was the same year that I posted my first article that tackles the cost of college education in the Philippines. So much for the intro. Here’s the estimated tuition fee per year in Ateneo De Manila in 2008 – P90,613.20. Today is 2011 and that was 3 years ago. If we’re to compute and based it on the 8% increase per year (it was reported that Ateneo had 5% tuition fee increase this year) , that would be P114,146.28 this coming school year 2011-2012.
Assumed Tuition fee in Ateneo De Manila University for SY 2011-2012 – P114,314.28
Using our magic Educational / Retirement Planning calculator, here are the future figures
Present value of ADMU tuition + misc fee – P228,292.00 (they say tuition fee is almost the same as that of misc. fees)
Future value of ADMU tuition + misc fee
1st Year (Year 2027) – 814,470
2nd Year (Year 2028) – 884,318
3rd Year (Year 2029) – 960,455
4th Year (Year 2030) – 1,043,468
Total Educational Fund needed – P3,702,711.00
To be able to arrive at that amount, what does she need to do?
To continue click here-> Educational Plan Options in the Philippines – A Mother’s Dillema Part 2
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