Taking into consideration tuition, textbooks and living expenses, it costs students an average of USD99,000 to fund their university degree. Around 73% of parents say they plan to contribute but only 23% have an education or investment plan in place.1
Starting early and doing long-term saving is an ideal way to fund an education but this option might not be practical for everyone.
Loans aren't the only option
Taking out a loan is another option, but it's not the only way to finance an international education. We want the best for our kids, and that includes preventing them from being saddled with debt before they even finish school.
With some strategy and research of what's available you can find a lot of other great options, such as:
- Education or investment funds
- Fee-free universities
- Grants and bursaries
- University jobs
- Interest-free loans
- Student loans
- Personal loans
1. Regardless of how much you save, save early for bigger benefits
If you can, start planning and saving early. There are a lot of factors to consider here. How much of your child's education will you be funding? Are you also saving for retirement? You may have other financial goals and responsibilities, such as a mortgage or even your own student loan debt.
It can help to talk to an advisor to understand how much you'll need to save and what's the best way to reach your goals. Remember, it's nice if you can help your child avoid a crushing student loan debt, but not if it comes at the expense of liquidating your retirement savings.
2. Fee-free universities really do exist
Choose wisely and save yourself a lot of money right from the start. Some people may only have the Ivy League in their sights, but don't overlook universities that offer low-cost or even free tuition for international students.
There may be nominal admin fees to pay and of course there's still living expenses to consider, but think of the money you'll save over the next 4 or more years.
Germany, France and the Nordic countries are just a few that offer free higher-education to students. Undergraduate degrees are usually in the native language but there are many post-graduate level degrees offered in English.
Something to consider: many students say they choose their university because they have a chance to apply for a post-study work visa after graduation. Canada, the UK, the US, Australia and New Zealand are a few of the English-speaking countries that offer these visas (but not sure you'll find a free university there!).
3. Scholarships can be the best way for international students to fund their studies abroad
Possibly the most well-known scholarship is the highly competitive and merit-based Fulbright Foreign Student Program for graduate-level studies. But did you know you don't always need to be the most academic in your class, nor the most athletic, to win a scholarship?
A scholarship's criteria can be merit-or needs-based. It can also be dependent on your nationality, your major or even your gender. Don't believe it? Google ''weird scholarships'' to see how you could turn your passion for a plant-based diet or working underwater into funding for school.
Scholarships do require a lot of paperwork, and this can be a hassle that discourages many people. But it's worth the trouble. There's no limit to how many scholarships you can apply for and it can be a great way to pay for schooling.
4. Grants and bursaries, like scholarships, are considered ''gift aid'' and don't need to be paid back
These are often on a first-come, first-serve basis, so students need to apply very early. Unlike scholarships, which are often merit-based and come from different sources such as community organisations or individuals, grants and bursaries are usually needs-based financial aid. Talk to the school's financial aid department to find out if you're eligible.
5. University jobs provide extra money and work (and life) experience
Many countries, such as the US, the UK, Canada, Australia and France, allow full-time students to legally work part time on campus and sometimes even off campus. This varies by school, country and student eligibility. Students will probably need a local bank account for salary deposit - something that can be organised before they move abroad for their studies.
Getting some work experience while still in school might make it easier to land a job after graduation. Want more good news? The UK is reinstating its post-study work visa for international students, which will allow students to stay on in the UK for up to two years to pursue employment.
6. Interest-free loans are usually paid back in instalments of around 5 years
Interest-free loans don't usually require students to pay interest or to meet the usual credit requirements needed to qualify. Applications can be competitive, however, and based on need.
If a zero-interest loan seems too good to be true, take a closer look at the fine print. Some lenders may require you to start paying this loan back before the student even graduates.
7. Student loans are easier to find than interest-free loans
Student (or education) loans typically have lower interest rates than personal loans, but at least the lender usually waits until after you graduate before you have to start paying it back.
While parents can co-sign, the student is the main borrower of these loans. If you can, though, it's good to start paying the loan back in small increments. That way, there will be less interest to pay at the end of the loan.
Still unsure about the best way to pay for an education? We've put together a program to help you understand key financial concepts so you can make better decisions related to your student finances.
8. Personal loans have certain eligibility requirements, such as proof of income and your ability to pay the loan back
Interest rates can vary depending on the length of the loan, and the loan amount might depend on your credit profile. Existing HSBC customers may receive their funds instantly if they're approved for an HSBC loan, and they've signed a promissory note.
Benefit from our international banking expertise
Education planning is the best way to provide a debt-free future for your children. Talk to a financial adviser to research your options for financing your child's study abroad. It can help to to use a loan calculator to assess what sort of loan amount you're comfortable with and to come up with a repayment plan.
Our global experience means that we're able to support international customers who have financial interests in different countries.
Ready to open an overseas bank account?
If you have an HSBC bank account in your home country, consider opening up an account where your child is planning to study. We offer international multi-currency account opening services and access to the dedicated Premier support team.
Fill in our quick form or contact your Relationship Manager and we'll get in touch to answer your questions and help you begin your application.