UK University Announcement Highlights Need for Tax-free Expats to Plan for University Fees According to PIC's regional director

Expat University Fees warning. End Quote

(1888PressRelease) October 13, 2010 - Today's announcement that university students in the UK will be charged £6,000 (Dh34,000) a year or more for their studies, if the Government adopts the recommendations made in an independent report, has serious implications for expats, according to the regional director of financial advisory PIC.

Lord Browne's review into UK higher education funding would mean UK students have to pay more for their university studies - both in fees and higher interest rates on loans, with the average student leaving university having borrowed up to £30,000 (Dh171,000) to cover fees and living expenses.

Many parents living in the UAE are already facing university fees of hundreds of thousands of dirhams per child to send their offspring abroad to study. And with the cost of further education in the UK rising by over seven per cent yearly, Spencer Lodge, regional director of PIC, a member of deVere Group, urges expatriates to put plans in place now for their children's education.

The implications for expatriates who have not been contributing tax in the UK are still uncertain. However, the cost of a UK university course can currently be over Dh60,000 each year for, which is up to four times the fee that taxpaying UK residents pay. Add accommodation and living costs to this and some parents are looking at over Dh100,000 per child each year - over Dh400,000 for a four-year degree.

Lodge explains how forward thinking can help expatriates soften the financial blow of their children's university education. "When the news breaks that a baby is on the way many quite rightly turn their thoughts towards providing for their child's future. Our consultants mainly deal with expatriates and, in general, they tend to have primary and secondary education either paid for by their company, or instead factor this cost into their monthly salary.

"It's very rare for us to establish a structured short term savings plan for a child's primary school fees, as it's too short a period to save enough, based upon the child starting school at four or five years old. It makes much more sense for the parents to factor these fees into their outgoings and look towards university fee planning, which is a major expense and far enough in the future to comfortably plan for.

"For example, we find a school leaver brought up in the UAE by British parents is very likely to choose a university in the UK, USA or Australia. We also know parents often prefer the teenager goes to a UK university and follows in their footsteps. Regardless of who makes the decision, it will be expensive, even without considering living costs. Living costs are substantial, as most affluent parents are very conscious of not wanting their offspring to leave university under a mountain of debt built up over four years living on their own," he says.

Lodge adds, "Our experience shows when children grow up in expatriate families the prospect of further education is virtually certain, so financial planning caters for this. For example one of our consultants recently dealt with a client who works for a fund management company in Abu Dhabi and has two children - three and five years old. Fortunately for him, his company, like many others, is paying all school fees until tertiary education commences.

"Based upon the current 7.5 per cent rate of university fee inflation, we calculated the youngest child would need just over Dh1,000,000 by the time he is ready to attend university. It would take a commitment of over Dh5,500 per month saved in a bank offering minimal interest to achieve this.

"However, the client invested in a structured savings vehicle which allows his money to work towards his goal, therefore bringing the monthly commitment to a much more manageable Dh3,000 per month to reach the same target.

"This is achieved by dollar cost averaging - investing into different asset classes on a monthly basis targeting returns of between 6-10 per cent per annum. At the end of the 15 years, the total sum for the child's university fees can be withdrawn from the plan and deposited in the parent's bank account or used to pay the fees directly.

"Expatriates enjoy tax free living in the UAE, so there is no reason why they can't make manageable provisions early for their child's university fees and avoid the financial turmoil they will inevitably encounter."

With in excess of US$7 billion of funds under administration and management, deVere Group has more than 50,000 clients in over 100 countries with plans to open many more office across the Middle East and North Africa over the next three years.

www.devere-group.com

For more media information, please contact Ian at Custard Communications for PIC/ deVere Group on ian ( @ ) welikecustard dot com +971 50 4661368

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