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SCMP Reporter

EDUCATING children in Hong Kong can involve a big financial sacrifice with fees at international schools among the highest in the world.

  While the international system provides the continuity of an overseas curriculum, it is simply too expensive for many people.

  Individual debentures - a one-off payment to a school which does not include annual fees but is refunded when the child or children have finished their education - range from $30,000 at the German Swiss International School to $75,000 at the Chinese International School.

  The new Australian International School due to open next month will charge an individual debenture of $30,000.

   Some schools, such as the Hong Kong International School, offer the alternative payment of a non-refundable levy of $12,000 per child.

  Fees at the English Schools Foundation (ESF) are set to rise by 9.38 per cent at the start of the 1994-95 school year to $33,800 for a primary student and $56,000 for a secondary student.

  University tuition fees in Hong Kong rose from $17,000 in 1993 to $24,000 in 1994, a 41.2 per cent rise.

  But the most daunting cost is for a place at an overseas university, where fees and living expenses for one year can cost more than $100,000.

  A plan that enables parents to pay for children's schooling without suffering financial hardship is therefore clearly worthwhile.

  With education costs escalating dramatically, attention has turned to so-called 'school fee' financial plans.

  But although insurance companies tout some enticing products allegedly designed to finance expensive school fees, these plans may not be quite what they seem.

  Cleverly packaged insurance industry products that bear school fee labels are often nothing more than commission-loaded endowment plans.

  Beware of financial advisers who call themselves school fee and pension specialists. Not only can they operate without any licence, they may also sell long-term policies that carry extremely high commissions.

  Samantha Marmara, private client department manager at Bentley Reid & Thomas, said saving for school fees was no different to saving for any other big liability.

  'We advise our clients to save a pool of capital that is accessible but you don't need to have a separate pool of money to finance school fees,' she said.

  'It's cheaper to run your savings as one single pool and, if necessary, to separate it mentally into designated areas such as school fee and retirement money.'   Bentley Reid & Thomas advises its clients to use unit trust savings plans to pay education costs, and recommends funds that have been steady performers, rather than high-risk vehicles.

  'Be very wary of a number of school fee plans because their commission charges are very high,' Mrs Marmara said.

  The company's deputy chairman, David Thomas, said the rules for school fees were exactly the same as those applied to any other savings goal - a flexible savings plan that performs well.

  'Don't get stuck in a 12 or 14-year plan that has ridiculously high premiums,' he said.

  'Avoid products that require long-term commitments because your financial circumstances may change and you need a vehicle that enables you to change or stop the amount you pay without being crippled by penalties.'   Britain's Unit Trust Information Service cites a number of advantages that unit trusts have over insurance-based savings plan as savings vehicles for school fees.

  For example, investors can vary their monthly payment or add in lump-sum contributions. They can also sell their units whenever they want to opt out of the commitment.

  Unit trusts also have much lower surrender penalties or none at all, whereas insurance-linked products penalise investors who pull out early.



Lessons to learn on school fees