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Wednesday 27 June 2018

Hacking Tertiary Education

B.Sc. Computer Science?
Tertiary Education is expensive – old news. And it is only going to get worse with tertiary inflation averaging around 9% per annum, and even brushing up against double digits in some years.

It is something that was on my mind from before Stealthy Junior was even born, and for that reason I started putting money away for his possible Tertiary education from pretty much the first month after he was born.

I am pretty confident this early start means we will have enough to cover his tertiary if and when he gets there. However, I have since made a realisation which could have a significant financial impact – to the positive side (those are always nicer than the other kind!)

As it stands, all first year students from families who earn less than R350,000 per year will qualify for free higher education. Current projections for our family’s expenses in early retirement stand at around R320,000 a year in today’s money.

It seems that early retirement in combination with keeping our cost of living relatively low, could have a really cool and unplanned side effect – free University for our son!


But then...

A Moral Dilemma

The free tertiary benefit made me think of a very common misconception in society – and that is that a lot of income equals wealth, and a small amount of income equals poverty (as opposed to wealth being more about assets than income?)

Bearing in mind that by the time my son is of University going age, and if everything goes according to plan, we would have been financially free for around 4 years. I certainly don’t think our family are one of the ones Government were targeting with their free Tertiary education benefit?

By setting the criteria according to income, Government will unintentionally be offering the benefit to families outside of their target. Having said all that, I do understand that using income as the yardstick is probably the easiest way for them to do it, because income is easily verifiable by SARS, whereas net assets can be a lot more murky...

Either way, it is what it is, and so, as things stand, we would qualify. And so I found myself in a bit of a moral dilemma:
  1. Initially I gave some thought to the fact that I should probably not be making use of a benefit for which I should probably not qualify for, but for which I managed to become eligible for through careful cost management and planning. There are far more deserving families in this country which would not have any other choice if it weren’t for this Government benefit.
  2. But then again, there are only x amount of spots per Tertiary program, and if my son qualifies for one of those spots, he will fill it, regardless of whether he funded by us or by Government. And so it actually won’t benefit any other student whether we end up paying for his spot or not?
  3. And then there is also the fact that, in general, civilians pay their Tax, and the Government offers them services in return (that is pretty much how Tax is supposed to work, not so?) I have been a tax payer since the day I started working, and if Government wants to offer me free services (albeit unintentionally) for my Tax money shouldn’t I happily oblige? Maybe I should be using any and all Government benefits available to me as a Tax payer?
I would really love to hear your guys take on this? Feel free to put your thoughts in the comments...

Change Is Certain

And then off course all this may be a non-issue anyways. As the situation stands, we would qualify for free Tertiary. But who knows what things will be like by the time my son is of University-going age.

Government, may not increase the R350,000 criteria with inflation – in which case we would no longer qualify. Maybe they do decide to base the criteria on assets or net worth instead of income. Or the benefit may even be removed in it’s entirety.

So my approach is to continue investing for Junior as if I will need to foot his full Tertiary bill, and then checking if a free option still exists closer to the time – a.k.a. planning for the worst, while hoping for the best.

Who Would Want A South African Tertiary Qualification Anyway?

And then finally, there are the people arguing that we shouldn't even be wasting our children's time with a South African University qualification anyway. The thinking is that the quality of our University degrees will deteriorate due to the massive influx of “free” students. I have seen statements like “University qualifications aren’t going to be worth the paper they printed on”.

However, I take a slightly different view on this.

With the option of a University education now open to a lot more students (many of which would have higher Grade 11 and Matric (do they still call it Matric?) marks than paid applicants). Consequently, there will be a whole lot more people applying for places in the various University programs. This means more applicants for the limited number of spots available on each course. This means increased competition, and the University will be able to select only the top performing applicants to get into the various programs.

So in general, the intake will be of a higher quality than without the free tertiary option. This should result in a better quality graduate, which, in my opinion, would actually improve the worth of the qualification. So this may actually be a good thing for South African University qualifications. Again I invite you to please share your thoughts on this - maybe my head is too far up in the clouds?

Yet Another Benefit To Keeping Expenses Low

Every now and then I am reminded what incredible options get opened up to use just by keeping our expenses in check, and being responsible with our money.

First it was the option to be financially free by 45 - something I wouldn't have thought remotely possible a few years back. Next it was the option of my wife to become a stay at home mom to our son for a few years. With higher expenses we would definitely not have been able to do either of these things.

And now another one to add to the ever growing list - the option of free tertiary education for our son.

Till next time, Stay Stealthy!
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