Phuket Finance: Educational arbitrage
PHUKET: I think everyone would agree that a big part of long term financial planning is saving for their children’s university fees, which continue to reach more and more astronomical heights. However, very few people realize there are many ways to greatly reduce these costs without reducing your child’s value on the job market.
Arbitrage usually refers to buying a security cheaply on one exchange while simultaneously selling on a different exchange where it trades at a higher price. Nowadays textbook arbitrage plays are hard to find and the big institutions use very complex methods to try and achieve arbitrage profits – but when it comes to education prices, arbitrage possibilities are abound.
When it comes to life-planning it is often said that one needs to begin with the end in mind. I think this is true with education as well. For instance, if you would like to see your children educated to the graduate degree level, there are many routes to get to the same institution and graduating class. The total cost of getting through from kindergarten to a Master’s degree is not going to be cheap in any case, but going about it in different ways can drastically reduce the total amount.
Encourage your kid and you may also be delightfully surprised to receive sports or scholastic scholarships. I am not a big believer on pushing kids too hard, and it is important to let kids follow their passions as well as their strengths. Obviously scholarships can’t be relied upon solely, but apply for them at every opportunity.
Where I see the possibility of generating real savings, is using the method of increasing the ‘cost level’ of education gradually throughout the entire education process. This is what I call educational arbitrage. Even without an IB international diploma, a child could graduate from a Thai school with an English program and still study abroad. Spending some time on testing your child’s strengths and weaknesses throughout his early years can pay big dividends if you get him or her tutoring where they need it.
Prepping your kid to score off the charts on standardized testing such as the SAT exam is something that should start early. While I think these kinds of test are over-rated and easily gamed, admissions staff the world over rely heavily on them to distinguish between applicants.
Transferring credits is the real key to big savings. If a parent is an American for example, the child could go to the states and work for a year to gain residency in a given state and then attend a very low cost community college. I myself first got a two year associates degree in business from a local US community college. These credits are then transferred to a bigger name four year university and you end up with the same degree as everyone else at half the price! Most countries have rules that you can use to your advantage with a little creative thinking.
I realize there is a difference between a degree and an education, but I graduated summa cum laude and am sure I left my four year school with a much better education than many of my classmates who spent all four years there. The difference comes from effort, and that is something that needs to come from intrinsic motivation, which I believe is a result of being brought up properly by your parents. Throwing money at a school isn’t a replacement for spending time with your children and instilling good values, although, maybe I am old-fashioned.
If your child gets good grades in a mid-range university and does well on standardized tests, then when it comes to graduate school he or she will be able to choose among the top schools. This in my opinion is where your education will be “judged” by the job market. If you graduated from Harvard, nobody is going to care what kind of middle or high school you went to. Work experience, a global outlook, languages spoken, and many other factors will also affect your child’s chances.
Obviously, if paying a top international school’s fees doesn’t cramp your style then I am not saying this isn’t ideal, but for many expats in Phuket, this is not a choice. If this is the case, don’t fret, there are many ways to get your child educated to a standard where his or her opportunities in the world will not be limited. It just requires creative planning and careful monitoring to make sure your child is proficient in all of the required areas.
David Mayes MBA resides in Phuket and provides wealth management services to expats around the globe, focusing on UK pension transfers. Email david.m@faramond.com or call 085-335-8573.
This article appears in the current issue (June 1-7) of the Phuket Gazette newspaper, now on sale at newsstands throughout the island. Digital subscribers may download the full issue, this week and every week, by clicking here.
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— David Mayes
