Indian parents work extra hours, reduce leisure spending to put children through university: HSBC survey
30 July 2018
Parents are taking on extra work, sacrificing holidays and turning to borrowing to pay for all aspects of their children’s university education, while students estimate they spend more on takeaways than they do on textbooks over the course of a degree, HSBC’s The Value of Education - The Price of Success report reveals.
According to HSBC’s study of 10,000 parents and 1,500 students across 15 countries, 4 out of 5 parents (84 per cent) rely on their day to day income to support their child’s university education, with 41 per cent having no specific education savings fund at all.
With parents spending an average of $16,338 on their child’s tertiary education, many are forced to make some significant sacrifices. Contribution is highest in Hong Kong, where parents are prepared to spend an enormous $51,656, followed by UAE ($29,398), Singapore ($26,377), and Mainland China ($21,046). Indian parents spend an average of $5,560 on their child’s education over a typical university course.
Over one third (35 per cent) of parents globally and just under two-thirds (64 per cent) parents in India say they have taken on debt to put their kids through university. Loans and credit cards are the most common form of borrowing for Indian parents.
In the face of financial pressure and lack of long-term planning, many parents are forced to make personal sacrifices to support their children during their studies. Around 60 per cent Indian parents (vs 53 per cent parents globally) say university has forced them to reduce leisure activities such as eating out at restaurants and trips to the cinema, while 59 per cent Indian parents (vs 41 per cent parents globally) have taken fewer holidays and 49 per cent Indian parents (vs 35 per cent parents globally) have taken on extra hours at work and / or a second job.
While student expenditure might be high, many students are turning to part-time employment to fund their lifestyle and keep up with costs. More than 4 in 5 (83 per cent ) globally are working students, most commonly for extra money (53 per cent). On average, students spend 3.4 hours in paid employment, more than they spend in lectures (2.7 hours), studying at home (2.5 hours) or at the library (1.6 hours). However, most parents prefer for their children to concentrate on their studies instead, with 77 per cent of those with a child at university saying they plan to look after their child’s basic living costs so they can focus on their studies.
61 per cent of Indian parents wish they had started saving for their child’s education earlier while 46 per cent wish they had saved more regularly. Alarmingly, 35 per cent of Indian parents worry that they don’t have the financial resources to support their child’s education. Despite the significant investment, the value of tertiary education is still clear in the eyes of both parents and students, with 68 per cent of parents globally with a child at university and 70 per cent of students saying that a university education is worth the money. 85 per cent of Indian parents agree that a university education is worth the money.
Commenting on the survey, S Ramakrishnan, head-retail banking and wealth management, HSBC India said, “For many young adults, university marks the beginning of greater financial independence, making it a practical time for parents to sit down and have an honest discussion about how to manage their money. It’s clear from our research that many parents regret not thinking ahead when it comes to funding their children’s education, with over half wishing they had started saving earlier.
“University is a major investment and an expensive time for both parents and students. Sound financial planning and honest conversations about the cost of education as a family will help avoid financial pressures and short-term borrowing, enabling focus to be placed firmly on studying.”