Chapter 1 - The cost of attending university in South Africa

Intro

What I am about to show you is not pleasant. At times, you will not know whether you should laugh hysterically or cry. More than likely you will do both. Laughter comes first, then the crying starts. Your crying eventually gives way to anger. You will blame your partner for wanting to have children in the first place, before finally throwing a hissy-fit on the floor.

Don’t worry. These emotions are normal. It is all part of realising you are in deep “kaka“ (or “you are in a pickle” a direct translation for non-South-Africans) when it comes to putting your child through a “moerse“ (or “groot kaka“ - no direct translation possible) expensive tertiary education system.

Like any good story, there is a good ending. You see, unlike your friends, who put away money into their home loan for education (do not do this), diligently open a TFSA in their child’s name to fund education (please do not do this !!!) or like a blind person simply ignore it completely (not recommended), you will by the end of this chapter know the numbers.

And knowing the numbers gives you power. Without knowing, you will be unable to formulate plans and eventually resort to blind strategies (like using your home loan access facility for your child’s education). Knowing the numbers - albeit painful - will give you the power to calculate how much you need to save at what age (which we will cover in chapter 2) and then how to invest that money (chapter 3). So keep that in mind when reading the below.

Ok lets get to the painful part - the actual cost of education.

Annual Cost of Tertiary Education 2020 - South Africa

Like a bird set free, your child will fly away into the university study halls, fend for themselves, learn to cook and hopefully act like a semi-responsible adult. Unlike a bird, you will still need to support the free-flying half adult. ie pay for tuition fees (these rise at a rate higher than inflation - which will be important in estimating future costs), textbooks, stationery, accommodation, food, trips back home and general living expenses.

Below is a table showing low, medium and high annual cost for attending one year of university.

LowMediumHigh
Tuition FeesR 39 000R 49 500R 61 000
Textbooks, Stationery, EquipmentR 7 500R 10 000R 12 500
AccommodationR 48 000R 72 000R 108 000
MealsR 40 000R 48 000R 56 000
Trips back homeR 1 500R 6000R 12 000
Living expensesR 24 000R 36 000R 48 000
Annual total costR 160 000R 221 500R 297 500

[ depressing table for cost of attending a university in 2020]

Notes on how these were calculated. The data set for tuition fees are 1st-year fees at Tuks, UJ, Maties, Rhodes and UCT. Specifically, an average cost for each field of study within BA, BSc, BEng and LLB was sourced from the university fee handbooks to serve as the dataset. Low, medium, high are the 25th, 50th and 75th percentiles, respectively. Thus, you will still find degrees cheaper than the figures presented. For example, a BA Communication degree at UJ will set you back around R32k in tuition fees. On the other hand, a BSc Eng (Mechanical) degree at UCT will be more than double that amount at about R70k pa. Wowza.

Thoughts on costs for 2020

Two things which popped out at me when looking at the depressing numbers above.

Firstly, the total cost for one year of study is unaffordably high. So much so, that I went back to the data and double-checked if this could be right. Unfortunately, no critical mistakes found. You could make a case to to put your child onto a tigher living expenses budget, but this will not make much of a dent in the overall annual cost.

Secondly, the cost of accommodation is the biggest part of the budget. Ok. Here is where things get tricky. If your child makes it into residence then you will pay between R30k-50k per year (or R2500 - R4000 per month). Quite a bit below the figures I presented. However, spots to residencies are very limited, so unless your child can stay at home with mummy and daddy, you will more than likely have to pay for an apartment close to the university. And this is where things can get expensive quickly. Especially if your kid likes privacy. In the end, I went for an average figure that is “reasonable” for a house-share. But, the accommodation is part of the budget which you can amend and adjust accordingly to your own assumptions.

Assessing the costs for 2030, 2035 and 2040

It is all fine and well in assessing the cost of education now, but we need to project it to 2030, 2035 and 2040 when your child will be going to university.

Unfortunately, there is some more bad news for you. It is called “eduflation”. Ie the rising cost of education. The bad news is that “eduflation” has been consistently higher than the official inflation numbers by about +/- 2.5%-3% per annum. Eduflation was the number one reason for the #FeesMustFall movement in 2015, which led to university shutdowns and even protest marches as far as Trafalgar Square. Unfortunately, 2015 was a blip as far as fee increased go. Universities, whilst more cognizant of hiking fees, have resumed their old practices. Thus we have to assume that eduflation is here to stay.

For our purposes -tuition fees, as well as textbooks and equipment, are increasing at 3% over and above inflation. Accommodation, meals and the other expenses are rising at inflation rate of 5.5%. Given these rises in costs, here is a table of annual costs for 2030, 2035 and 2040.

Based on Medium203020352040
Tuition FeesR 112 000R 168 000R 253 000
Textbooks, Stationery, EquipmentR 22 500R 34 000R 51 000
AccommodationR 123 000R 160 000R 210 000
MealsR 82 000R 108 000R 140 000
Trips back homeR 10 500R 13 500R 18 000
Living expensesR 62 000R 80 000R 105 000
Annual total costR 412 000R 563 500R 777 000

[ ultra-uber-duper depressing table attending a South African university in 2030, 2035 and 2040]

In 2035, you will need to fork out roughly R 563 500 for one year of study. If your child does a typical three year bachelor degree, then the total cost will be R 1 690 500. Add one more year for Honours and you need to fork out R 2.25m. Gulp.

It is difficult to digest these 'future' numbers. 2035 is ten years away. Today's R100 will not be worth R100 in 2035. Thus it is difficult to digest 2035's R2.25 million (or R560k per annum) as we tend to relate everything back to today's money. So to make sense of these future numbers - yet at the same time take into account of eduflation - lets present these future education costs in 2020 terms.

203020352040
Annual total costR 412 000R 563 500R 777 000
Annual total cost (2020 money)R 241 200R 252 400R 266 300

This is the only table within this chapter you need to pay attention to! It shows you what you will be paying for one year of study for your child (in today's terms).

Example, if your child will go to university in 2035 (ie in 15 years), you will be paying an average of R 252 400 (in today's money) for one year of study. This is your all-in annual figure! It takes into account tuition fees, accommodation, meals, living expenses and crucially eduflation!

Where to from here?

I had to give the bad news up front. With this depressing chapter out of the way, you can now pave the way to formulate a savings and investment plan. That is coming up in the next chapter. I will show you how much you need to save per month to make these costs bearable.