How affordable is tertiary education for Namibians?
Yes, education alone does not guarantee the accumulation of wealth. It does however equip the recipient with the knowledge to create wealth.
The affordability issue has taken over South African news and indeed the sentiments have swept over to Namibia, if recent reports are to be believed. It had also been reported that Namibian students owe hundreds of millions in unpaid fees.
Tax deductions allow every working Namibian to provide for their dependent's tertiary education up to a maximum deduction of N$40,000 per year, inclusive of retirement provision. These funds can be saved in a study policy. Currently UNAM fess for a degree in Science costs N$30,000 per year or N$120,000 for the four year degree.
The trick is to start when the child is born. This allows for compound interest to work its magic. To simplify the calculation refer to example below.
Costs / term (in months) = monthly savings
If the provision is taken out when the child is born:
N$120,000 / 216 months = N$555,56 savings per month
(This is a simplified calculation. To ensure that the funds are not eroded by inflation your contribution has to increase with the inflation rate, at least. This also does not include growth on the funds selected. This will however give you a nice buffer for increases in the fees that most often are in access of inflation.)
NB: The longer you wait to make the provision the harder it becomes as you will have to save more.
This deduction is a real provision that many people do not make use of. Granted that if your income does not allow you to make use of the deduction, e.g. if your income is below the lowest tax bracket, this benefit does not benefit you.
Costs should be worked out on whether the child will go to the hostel (not included in calculation) and the university you want the child to attend. Calculations should be done by a qualified Financial Advisor.
e-mail: theos@sanlam4u.com.na
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