Updated: June 17, 2022
First of all, I’d like to congratulate all parents for surviving another season of school enrollment.
I know it’s not easy to provide for your child’s education, that’s why I truly respect all parents who continue to work and sacrifice their own needs, just to keep their sons and daughters in school.
Over the past few weeks, I’ve received several inquiries from parents regarding how to plan for their child’s college education.
A few of them, unfortunately invested in educational plans that have gone bankrupt and are now trying to recuperate the time and money they’ve lost.
Indeed for most, if not all parents, seeing their child finish college is a priority in life. And today, I’d like to help a little bit by teaching you how to be “SMART” about reaching this goal.
By definition, a “SMART” goal should be Specific, Measurable, Attainable, Relevant and Time-Bound.
Among these five, ‘Time-Bound’ is easiest to define as it is simply the number of years before your child enters college.
‘Relevance’, or answering the question, “Why is this goal important to you?” is also easy to resolve because I’m sure you believe that one of the best gifts you can give your child is an education.
Furthermore, there are many expenses that a parent must provide for when they have a child in college, but the largest portion is normally the tuition – that’s why I like defining this as the ‘Specific’ goal.
Now that you have a specific goal, it’s time to make it ‘Measurable’ or in other words, you need to set an amount for your goal. This is done by calculating how much enrollment fees you’d pay through your child’s college life.
This is where most parents play the guessing game. However, one can easily start at the current cost of tuition at the college or university, where you’d like your child to study. Go ahead and call them now to inquire, so you’ll have a base line.
Below are five schools that I’ve managed to find with little research (figures are 2018 estimates). Please note that these just ballpark numbers.
Total Tuition – All Terms
Ateneo De Manila University
De La Salle University
Mapua Institute of Technology
University of Sto. Tomas
University of the Asia and the Pacific
University of the Philippines
How much will the college education of your child cost?
The Commission on Higher Education (CHED) is keeping tuition hikes within the inflation rate, and up to 10% maximum every year. This means the figures above can only increase by at most, 10% each year.
To know how much your child’s tuition will be in the future, then use the formula:
( Tuition Per Year Today ) x [ ( 1.10 ) ^ ( Years Before Child Enters College ) ]
So for example, if your son will enter college 7 years from now, and you plan to enroll him in UP, then the formula would be: P60,000 multiplied by (1.10)^7 or around P117,000.
The estimate cost of tuition for your kid is PP117,000 after 7 years. Since the numbers above are 2018 data, then this is estimate figures for the year 2025.
Now, multiply this figure by 1.10 for each year that your child will study in college, and you’ll get a good grasp of how much you need to prepare financially:
Estimate Total Tuition (PHP)
1st Year – Freshman
2nd Year – Sophomore
3rd Year – Junior
4th Year – Graduating Senior
Now for the last part of your “SMART” goal, you need to ask yourself if the calculated total tuition is ‘Attainable’ for you.
If yes, then you need to create a workplan on how you will achieve this goal, and then follow it through until you reach the target amount.
If not, then you have to “tweak” your goals by either changing to a more affordable school OR, finding ways to increase your current income.
Is P542,000 in 7 years attainable? Yes, it is.
Assuming a 12% annual growth, you can do the cost averaging strategy and invest P4,200 per month for 7 years in the stock market or in an equity fund to reach this goal.
And that’s how you can calculate your child’s college tuition in the future. Of course, this is a simplified approach. If you’d like a more detailed financial plan, then you can check out my book entitled, Affordable Legacy.