Parents taking out personal loans to cover unexpected school fees

ABU DHABI // Many parents are facing unexpected school and university fees and taking out personal loans to manage them, a financial adviser said. Waleed Barhaji, business head of consumer finance at Noor Bank, said industry reports show the UAE to be one of the most expensive countries when it comes to annual education costs, […]

ABU DHABI // Many parents are facing unexpected school and university fees and taking out personal loans to manage them, a financial adviser said.

Waleed Barhaji, business head of consumer finance at Noor Bank, said industry reports show the UAE to be one of the most expensive countries when it comes to annual education costs, after Australia and the United States.

“It is very fair to assume so as education is the second, if not the first highest cost after rent,” he said. “Year after year education costs – whether they are schools, colleges or universities – are showing an upward trend.”

The Education Cost Index in Dubai has rose from 2.92 per cent last year to 3.21 per cent this year, enabling schools to increase their fees for the 2016-17 academic year by 3.21 per cent to 6.42 per cent, depending on their ratings following school inspections.

“Usually the cost of a college or university can be divided into two major elements. The first is tuition and fees, while the second is room and board,” said Mr Barhaji. “Then you add other expenses such as books, supplies, personal items, etc.

“All these expenses are on the rise year on year. A good university in the UAE, for example, would not cost lesser than Dh80,000 to Dh100,000 per annum, per student – which is not cheap.”

Families are often caught out by extra costs that they have not accounted for, said Mr Barhaji.

“Costs like charges for entering or transferring students, changing courses and subjects, as well as accompanying costs such as a new laptop or a tablet, sportswear and gear are all extra costs,” he said. “Health insurance is usually a separate cost that parents would undertake personally and is not usually covered by the employer, as a lot of employers have a restriction on the number of kids and their age – for example, two or three children up to the age of 18.”

The only way students and their families can minimise education-related debt is proper financial planning for both the short and long term, said Mr Barhaji.

“This year for example, was a difficult year for many parents, as many went through Ramadan, Eid holidays, summer holidays, travelling back to home countries, and are now preparing for schools or universities,” he said.

“All of these expenses in such a short duration might take a heavy toll on some parents.

“Without proper short-term planning from the beginning of the year, parents would have to secure a personal finance in order to manage.”

newsdesk@thenational.ae

Source: uae news

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