Options for Financing tertiary education in Jamaica
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FINANCING TERTIARY EDUCATION Strategies for Parents and Students
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FINANCING TERTIARY EDUCATION- THE FACTS
Education is a right. College education is a privilege Education is expensive- everywhere and to
everyone Options are not as limited as you think
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How important is it to you?
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OPTIONS FOR FINANCING COLLEGE
Student Loan (SLB) Bank Loan Savings/ Investments Cash Value Insurance Scholarships/ Grants
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JUST AROUND THE CORNER
Secured Bank/ Credit Union Loan 9% - 13% over 2 -5 years
Parents with adequate security: cash, house, investments
Dip into life savings (not recommended) Student Loan Grants/ Scholarships
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STUDENT LOAN
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STUDENT LOANS
Students’ Loan Bureau loan is the best loan financing option available
Lowest unsecured interest rate available. 9% compared to rates above 18% for private financing.
No repayment required during college 6 months grace period after graduation
SLB loan compares well with student loan options available internationally
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STRATEGY FOR REPAYMENT
Reduce the speed at which interest accrues on your loan by making early repayments
Repay as much as possible before grace period ends
Don’t wait until payments are due to start making them
Don’t get a student loan
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REPAY STUDENT LOANS FASTER
Accept that you have a responsibility and take it seriously
Get informed and make a plan Details on student loan structure What’s your interest rate How much time to repay Can you make early payments Can you pay before the due date
Pay early and often Reduces interest accrued Lower loan balance when payment becomes due
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REPAY STUDENT LOANS FASTER
Try to make payments while in school to reduce the compounding effect Ask your parents to make small payments to your loan
while you are in school Make payments from a part time job
Get a part time job during school and work every summer
This will help you build your resume, network and get a job faster out of school
Party less and enjoy yourself more creatively
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REPAY STUDENT LOANS FASTER
Join a credit union and save monthly This will help you to make payments during the grace period Also help you to build credit history in the event you choose
to refinance
Network in college and start your job hunt early (at least a year)
LinkedIn vs Facebook Reduces time spent unemployed Allows you to start making payments on time
Live on a strict budget, put off luxuries for a while Try to get a job at a financial institution,
government agency or well established business
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REPAY STUDENT LOANS FASTER
Refinance only if you can get another unsecured loan at a lower rate.
Most likely this will be from an employer Try to refinance before grace period ends
DON’T miss any payments Be grateful for the opportunities you have
received
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PAYING FOR YOUR CHILD’S EDUCATION
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CONSIDER ALL THE COSTS
Inflation Tuition Books Food Clothing Personal items Travelling Miscellaneous college fees Cell phone Talk to an advisor to estimate the projected
costs of college www.rate-bee.com
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OPTIONS FOR FINANCING TUITION
Don’t Pay Investment
Stocks/ Bonds Fixed Assets Collective Investment scheme Repurchase Agreements
Insurance Cash value Investment linked
Long term Savings Savings Account/ Fixed Deposits
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DON’T PAY OPTION
Studies show higher graduation rates but lower grades
More partying less studying More likely to choose unprofitable majors Bigger burden after graduation Students who pay their own way do better on
average
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INVESTMENT OPTIONS
Highest rates of return Highest risk Medium to long term outlook Requires an investment advisor Enjoy some tax free benefits Salary deduction and standing order
payments possible
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INVESTMENT OPTIONS
Stocks/ Shares Represent partial ownership in a company Long term investment option Preference shares or Regular shares Benefits of price appreciation and dividends No tax in price appreciation Low tax on dividends Highest risk but also highest returns Reduce risk by diversifying
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Stocks cont’d Contact an investment company
Mayberry Scotia Investments Barita NCB Capital Markets JMMB Stocks and Securities Investments VM Wealth Management First Global Financial Services Proven MVL Investments
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INVESTMENT OPTIONS
Bonds Loan to a company or the government Benefit from price increase and interest Higher rates than savings accounts or
investment accounts $5000 minimum to buy government bonds Interest/ Coupon payments are taxed Interest payments on global bonds are not taxed
at sourced Allows for fruitful foreign currency investment
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Bonds cont’d Contact an investment company
Mayberry Scotia Investments Barita NCB Capital Markets JMMB Stocks and Securities Investments VM Wealth Management First Global Financial Services Proven MVL Investments
www.rate-bee.com
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INVESTMENT OPTIONS
Mutual Funds and Unit Trusts Pooled investment option allows for risk sharing Mutual funds are usually foreign currency Allows investment options not otherwise
available High value real estate Private equity International bonds International stocks
Tax free benefits if held for five years (Unit Trusts)
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Mutual Funds NCB Capital Markets Mayberry FGFS JN Fund Managers Barita Scotia Investments
Unit Trust Sagicor Barita Scotia Investments JMMB NCB Capital Markets www.rate-bee.com
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Specialized Investment Accounts Barita Tuition Builder Mayberry Gold Repurchase Agreements (repo) and LSAs (all)
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INSURANCE OPTIONS
NCB Insurance Omni Educator Earn tax free interest Additional 20% Grant towards tuition Life insurance coverage Start with as little as $1000 per month
Scotia Mint Earn tax free interest Life insurance coverage Qualify for an annual scholoarship for high school
or college Inflation linked option Start with $2000/mth
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Guardian Accumulator Earn tax free interest Life insurance coverage Parental waiver benefit allows policy to continue
in event of parental death or disability Start with a little as $2000/mth
Guardian Investor 15 year policy Ideal for saving towards college Invested in stocks Contact advisor for more details
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HIGH YIELD SAVINGS ACCOUNTS
Lower interest rates Does not require active involvement Some options may have tax free benefits
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Golden Harvest Accounts (all credit Unions) FHCCU
Prosperity plus account Supreme Saver***
VMBS Isave account Igain account
JNBS LSA Classic
JMMB Tax Shelter
Fixed Deposit (any bank or credit union) www.rate-bee.com
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Find more information about: savings acounts Fixed Deposits Repo account
Visit www.rate-bee.com compare institutions and find the best rates
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STICK TO THE PLAN
Start early Earlier start means less monthly savings
Use a salary deduction or a standing order Choose an option which doesn’t allow easy
access to funds Increase your savings as your salary
increases Go for tax free options to ensure maximum
returns Ensure you have other long term investments
for retirement, emergencies or vacations Set periodic goals
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COST CUTTING IDEAS
Carpool Buy in bulk with family or friends Have extra space? rent out a room Eat Healthier
Tax free Cheaper short term and long term
Cook more often DIY and sell it! Buy used books Never buy full price/ Shop off season Shop online but travel less often Reduce Credit cards or don’t get any Refinance high interest loans www.rate-bee.com
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BUDGET MANAGEMENT
Daily Finance http://www.dailyfinance.com/ Microsoft Finance Plus software Download budget templates from Microsoft
website Download personal finance software from
sourceforge.net Use personal finance apps for your tablet or
cell phone Reward yourself when you reach a goal
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