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Page 3 of 3 The future cost of education also depends on inflation. In Singapore, the inflation rate has been 1.34 per cent a year for the past 20 years.What this means is that every $100 of purchasing power in 2004 is equivalent to $114.25 in 10 years' time and $130.55 in 20 years' time, assuming an inflation rate of 1.34 per cent.  Unfortunately, university tuition fees could increase faster than inflation. Tuition fees for the past decade at private four-year colleges in the United States rose by an average of 5.7 per cent, or 3.2 per cent a year, after adjusting for inflation. Another example is Canada. Inflation had grown by an annualized rate of 2.77 per cent for the last twenty years. Despite a modest historical inflation, Canada’s average fee increase for international students for the past one year was a surprising 6.70 per cent. The cost of overseas education also depends on foreign-currency rates. Take the Australian dollar, for example. From 1990 to 2000, it depreciated against the Singapore dollar by 27.46 per cent. This was good news for parents whose children were studying there. But to the dismay of many parents whose children have gone to Australian institutions during the past five years, the currency proceeded to appreciate by 14.85 per cent against the Singapore dollar. A general rule of thumb in forecasting is to add a few percentage points to the historical inflation rate. If the cost of an education is assumed to increase by 6 per cent per year, a four-year local tertiary degree could cost more then $125,000 in 10 years' time. In 18 years, it may be more then $200,000 - including assumed living expenses of about $83,000. The figures are astronomical for an overseas education. In 18 years' time, a medical degree in Britain would cost more then $1.1 million. ________________________________ Wilfred Ling is an adviser with Promiseland Independent. He is licensed by the Monetary Authority of Singapore to provide financial advice to individuals. Promiseland is not owned by any insurer, bank or fund manager. The information in this article is generic in nature and should not be construed as personal advice. Readers are encouraged to seek further advice from the author before acting on any information in this article. The author can be reached by
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. The original article "A degree could cost $125,000 in 10 years" that appeared in Sunday Times on 15 January 2006 and this article are copyright materials owned by Wilfred Ling. No part of this article can be reproduced in any media without the explicit permission of the copyright owner.
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