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Gulf Education: Best ways to pay for your degree

The only way to manage university fees effectively is proper financial planning, say experts

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The more children you have, the greater potential for higher fees if all the children go to university

Finding tens of thousands of dirhams is never going to be easy. So, what options are available?

“Student loans are typical alternatives in most countries for parents who have not saved enough for their children’s college tuition,” says Damodhar Mata, Authorised Consultant, Nexus Insurance Brokers. “Not many financial institutions in the UAE offer student loans, hence parents here have to borrow money via personal loans at a higher rate of interest.” 

Unfortunately, a personal loan is sometimes unavoidable and, whatever the financial situation, there are banks out there that can assist. 

“Universities in general can be a particularly expensive cost today, and you may need financing while working to ensure that your children can attend the institution of choice,” says Waleed Barhaji, Business Head of Consumer Finance, Noor Bank.

Evaluate options 

“There are many banks in the country that offer personal finance to consumers even without a need for a salary transfer, however, this usually means lower finance amounts and a significantly higher cost of finance. Banks also offer a number of options other than personal finance that help make getting an education a little easier. For example, there are cards available in the region that offer a three- or six-month easy payment plan at little or no cost. The market offers finances from one to five years depending on the need and capability of the parents, as well as various credit cards.”

While interest rates, along with terms and conditions, are generally competitive, websites such as mean that it is now easier than ever to shop around for the best deals. Whether financing or a savings account, the site provides information on the different deals available depending on your personal circumstances.

Financial planning

“There are numerous plans offered by nearly all the finance and insurance/takaful providers in the country, says Barhaji. “Plans can stretch from three to 20 years depending on your needs and capabilities. However, given the increasing cost of education, which can easily touch a million dirham per child, it is advisable to have a long-term passive plan with a trust arrangement in order to protect the child’s future in case an unforeseen event happens to the parents such as job loss or death.”

James Thomas, Managing Partner, Acuma, says that finance should be a last resort as there would be interest costs to pay, which would further increase the cost of any course. He advises, “Obviously the more children you have, the more potential for higher fees if all the children go to university. Therefore, the more children you have, the more is the amount of financial planning required.”

Those with young children, and who have enough time to save, it is essential to start thinking about the future now. “The only way to manage university fees effectively in my opinion is proper financial planning both in the short and long term,” says Barhaji.

“This year for example was a difficult year for many parents. During the past five months, many of them had to go through Ramadan and Eid, travelling back to their home countries during the summer holidays and preparing for schools or universities, etc. 

“All these expenses in such a short duration can have a heavy toll on some parents and, without proper short-term planning from the beginning of the year, many would have to borrow in order to manage," he adds. “Long-term planning is available through insurance/takaful products that offer a savings plan to help parents with future expenses and are offered through various banks in the UAE.”