With school fees ranging anywhere from AED2,500 to AED100,000, and almost 90 per cent of residents in Dubai choosing private education, there is no doubt educating your child in the UAE is going to take up a sizeable chunk of your income.
While some parents have school fees included in their salary package, many more do not – which makes paying the fees a costly process. Similarly, financing your grown up child’s university education here can be hard for those on lower incomes.
However, a number of financial products have cropped up in recent years to help parents with offspring in school or university manage the annual fees. From Easy Payment Plans and rewards for paying the fees on a credit card to education loans – help is at hand.
Firstly, a number of education loans are available to help parents spread the cost of tuition over a longer period of time. ADIB, for example, offer education finance of up to AED250,000 on a reducing rate of 10.25%. There is also the option to defer two instalments a year and the finance is available for primary, secondary or university education. However, you will need to transfer your salary to the bank and must earn over AED5,000.
Other products have similar offerings but there are number of catches consumers need to be aware of. If you take out a large loan amount and spread the repayments over the maximum four years, you need to make sure you store that money to pay for each year’s fees. There is no point spending it all and then having to take out another loan to pay for the next academic year – that could lead to a very unhealthy debt cycle.
There are also upfront fees to consider, generally 1% of the loan, and early settlement fees – also generally 1%. So if you are going to use a loan to finance your child’s school or university education, make sure you can afford it.
Another option is to pay for the school fees using a credit card. GEMS, who owns quite a number of schools in the UAE, has partnered up with NBAD (NBAD GEMS credit card), to offer a number of benefits.
The card offers tuition discounts of up 11 per cent on advance payments at any of the group’s 29 schools. There is also a 0% Easy Payment Plan that allows parents to spread the cost of the fees over 12 months.
Other credit cards offer cash back on all school fees paid on the card. The Standard Chartered Titanium Credit Card, for example, delivers 10% cash back on all school fee payments.
However, using debt to pay for fees can be a risky move if you do not have the means to pay it off. So ideally, plan ahead for education payments such as saving a lump sum now to pay for your child’s higher education.