Tax Smart Ways Parents Pay For University Fees

Most parents will use their retirement savings to pay for university fees when their children are ready for tertiary studies.

The truth is that students cannot pay for a 4-year college education and living expenses alone.

At Noble Sky International, using retirement funds should be the last resort for a parent to finance a child’s education.

While we believe that, we also know that, as parents, it can be heartbreaking to watch your children struggle.

Most parents can’t resist helping their children pay for university.

We all struggle to set aside enough money for retirement, especially if we have to fund several children’s college accounts.

Studies have shown that more fathers would consider withdrawing from retirement savings to help pay for their child’s college.

As the cost of living increases, financial planning is essential to fund your children’s education.

Tax Smart Ways Parents Pay For University Fees

How Much Is Enough To Plan For Your Child’s Higher Education?

Cost is crucial if you plan to manage your child’s university education.

Before your children grow up, you need to start planning for their tertiary education.

Public or private schools?

Local or international syllabus?

What are the options?

What can you afford?

Can you afford to send them abroad?

How will you fund your child’s education?

Whether your child selects the private or public school route, there’s likely to be a hefty higher education price tag in the future.

You need to consider student housing and accommodations if they are studying abroad.

It is common for parents in Singapore to enroll their children in a local university where the Ministry of Education subsidizes the tuition fee.

Singaporean universities, while placed high in global rankings, are highly competitive and can have relatively expensive tuition fees.

Cashing in on your child’s future can be pricey in a country like Singapore.

Even though students are encouraged to search for scholarships, not all meet the stringent qualifications to enter.

General tuition fees per year at Singaporean universities for various qualifications are listed below.

Foundation / Pre-U cost SGD12,000 to SGD18,000

Diploma cost SGD 5,000 to SGD18,000

Bachelor’s Degrees cost SGD20,000 to SGD60,000

Master’s Degrees cost SGD 30,000 to SGD 90,000

Ph.D. costs SGD20,0000 to SGD 90,000

Given the skyrocketing cost of college in the United States, the average tuition for 2022-2023 is USD 39,723 at private colleges.

At public colleges, tuition averages about USD 10,423 for in-state residents and USD 22,953 for out-of-state students at public schools.

Study costs, tuition fees, living expenses, other expenses, etc., would depend on the choice of program, length of studies, and university enrolled in, etc.

Now we have a ballpark estimate.

Let’s look at your income and savings. 

In 2022, Singaporeans aged between 40 and 44 earned a median monthly salary (Including Employer CPF Contributions) of S$6,825 or S$81,900/year (USD4,962/month or USD59,555/year).

Disposable income is your income (after income taxes) minus the household expenses you can spend or save – typically each month.

If you can make more income without putting in more hours at your job, that would be ideal.

You can benefit from both worlds and be free to enjoy your time with your family.

Working IN your business requires you to manage or execute tasks.

Working ON your business, however, requires strategic planning and decision-making that enables you to live in the C-suite.

However, the most profitable position is to be a real estate investor, where you make passive income through cash flow.

Once you clearly understand how Cash Flow works, you will realize that you can multiply your savings toward your child’s education by increasing it over time.

So, What Strategies Can You Use To Pay For University?

Most Singaporeans work and save money in their CPF accounts.

They start with owning an HBD flat and, after some years of growing a family, will buy a more spacious unit in a good school district.

Singaporean families feel they need to save hard to retire comfortably, but for many, more is required if they need to use their CPF money.

Some parents start by considering protection and buying insurance and endowment plans when their children are born.

Child Education Insurance Plans With Endowment

One of the ways to finance your child’s education is with a long-term savings plan that matures before your child starts university.

Many financial plans use a combination of savings plans, protection, and investment elements to grow the money set aside for your child’s education.

These plans are flexible with a maturity date.

You can make payments to the plan monthly, quarterly, or annually.

When the plan matures, you can receive up to the amount saved in your endowment.

What is NSI’s strategy?

At NSI, we know you want the most money for retirement and still pay for your child’s education, right?

We can help parents balance a well-funded retirement by investing in US real estate.

As a growth investment not tied to stocks, bonds, and shares, owning property for foreigners is a smart move.

Here is how this strategy can work for you.

Average Cost of Homes in Singapore

HDB Median Cost S$495,000

Condo Median Cost S$1,467,778

Landed Median Cost S$3,850,000

Here’s a breakdown of how much you’d need to pay for a condominium in Singapore if it costs S$1,000,000 without considering your monthly mortgage and maintenance costs.

Loan-to-Value (LTV limit 75%) S$750,000

Condo Down Payment (25%) S$250,000

Stamp Duty S$ 24,600

Total Condo Down Payment S$274,600

Cash On Hand S$ 74,600 (USD 54,036.44)

Assuming you have Cash On Hand of S$74,600 (USD54,036.44), NSI can help you strategize it this way.

NSI Has A Strategy To Pay For University Fees

Real estate investments in the USA have produced more wealth than any other industry.

As the leading convenor of real estate investment in the US property market for co-investment,

Noble Sky International has two viable strategies to help you pay your kids’ college fees.

The combination of Flip and Rental would work best for an investor.

Profits in a flip typically come from a discount on the property’s purchase price.

You buy a property, hold onto it for a short time, and then sell or flip it for a higher price.

For a longer tenure, you will want to own an investment rental property that is a passive cash cow that generates cash flow every month.

flipping property for better investment returns by noble sky international

Invest in a US Flip Property

In the USA, flipping houses involves buying an investment property, renovating it, and selling it for a profit.

At NSI, our track record shows a minimum profit of 30% for each flip property.

The duration of a flip can range from 9 to 15 months.

We recommend growing your initial capital of US$50,000 in 6 years to fund your child’s higher education.

You can start when your child is ten years old, so you have some buoyancy before your child enters college.

With an initial capital of US$50,000, you would need six flips to turn your 50K into a total of US$156,900 (capital included).

When your child is ready to enter college, you can take the sum out, US$50,000, for the college fund.

The US$100,000 can be used to buy and rent the property.

It can generate a minimum of 10% monthly rental yield (US$1000) for on-campus accommodation, food, and miscellaneous expenses.

If you want to see a Flip Return Simulation, you can make an appointment with an NSI Consultant.

You can also register to attend a Live Workshop in a city near you.

Conclusion

Saving for your children’s education is a long-term goal that may seem like a huge commitment.

Creating a carefully planned strategy and making time to grow your wealth will make the process much easier.

Start today, no matter how small the amount is. The earlier you start, the better the compounding effect will be because:

“Compound interest is the eighth wonder of the world. He who understands it earns it; he who doesn’t pay it.”

Whatever route you choose to finance your child’s education, the most effective way to do so is with plenty of research and action.

It’s always possible to begin creating stress-free ways to pay your kids’ college fees with our expert financial advice.

Learn more today!