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Tertiary Funding

How students finance a foreign degree
Published: 
Sunday, July 27, 2014

Governments since 1962 have fashioned policy not only with the benefits increased investment in human capital through education can bring, but also with thought to citizen’s thirst for education and the upward mobility it has traditionally provided. 

From universal primary and secondary schooling to free tertiary education and laptops, Trinbagonians have been able to partake in educational opportunities unrivalled in many parts of the world. The UK or North America are now not the only destinations for degree seekers as many students are opting to stay at home. A point, public affairs officer at the US Embassy, Alexander McLaren, emphasised at a seminar for guidance counsellors hosted by the Embassy’s Information Service on July 15. 

McLaren said: “The difference here is that students in T&T can access the GATE programme, almost for free. It is a wonderful programme that I often hold up to my American visitors of how T&T is using its oil wealth to benefit the people. Americans would love a programme like that, but everything in life has advantages and disadvantages.” McLaren explored, what in his opinion was, one of the unintended consequences of GATE. 

“The disadvantage of GATE is, when students graduate with a degree from Trinbagonian university they are competing with a large number of people with the same degrees from the same school. They have to find a way to stand out. Studying abroad—whether it is for four years or for a shorter term—is one of the tools that will let them stand out.” 

What “standing out” costs

The Sunday Business Guardian was unable to find statistics that prove or disprove McLaren’s assertion. According to UWI St Augustine principal, Professor Clement Sankat, in the university’s prospectus 2014/15, 18,000 full- and part-time students are currently attending the St Augustine branch of the UWI. 

While there were no figures on hand for last year’s intake, a review of the university’s 2010/11 annual report shows that 5,576 students entered the university in 2011/2012. This figure has been increasing steadily over the decade. Registrar at the University of T&T, Phillip Robinson, said the university took in 2,700 students last year.

On the other hand, figures from the Institute for International Education (IIE) show that 1,532 undergraduate students from new and returning students from T&T went to the US to study last year. This is down nine per cent over the 2012 figure of 1,689. 

This may mean that students are choosing the convenience of accessing a tertiary education locally as opposed to uprooting themselves to study abroad. It may also mean that people do not want to study abroad. It can also mean that more people would, in fact, study abroad if they could find the funding to do so. Indeed, several of the people that the Sunday BG spoke to said they went overseas to do their degrees for life experiences as well to gain a competitive edge.

If one makes the choice to do so, one will find that studying abroad is not cheap. Education USA, a network of advising centres in 170 countries that assists international students with finding information and financial aid, said that for room and board at a two-year community college, American students could expect to spend, per year, on average, $20,554; at a four-year public college, $35,778; at a four-year private institution, $62,533. International students can expect their tuition and associated expenses to be slightly higher.

All figures are quoted in US dollars. In the United Kingdom, legislative adjustments have allowed British universities to increase the cap on fees charged to British students to as much as £9,000 per year. Prior to 1998, tertiary studies were free to British nationals. In that year, the government introduced fees for the first time, stipulating that universities were to charge students no more than the initial cap of £1,000. 

Newspaper, The Telegraph, said in a 2013 article that the average fee for a three-year course was £25,941. The international student Web site, QS Top Universities, said that international students in Britain could pay fees as high as £38,532, or as much as £12,591 more. Meanwhile, in Canada, average fees for a citizen of that country were Can$15,000 for a three-year programme, but depending on the province and university, fees could be as much as six times more for internationals. 

Converted to TT dollars, these costs easily cross into hundreds of thousands of dollars. But some are finding a way to pay.

Financing a foreign education

According to IIE figures (see graph), this time from 2008, the majority of international students heading to the United States, get their funding from friends and family (62 per cent). Lisa, Tim and Carla all attended school in the US. Lisa and Tim attended an Ivy League school to do their graduate degrees. Carla opted to transfer her credit from a local university to a college in New York to finish her undergraduate degree in IT. Janice studied in Jamaica and the UK; Kavita, in Canada. They were all financed in some way by relatives.

Carla said, “It made no sense to go to a university here because they were not accepting the credits from the associate degree I did. I would have had to start all over again and do a four-year degree, after I had already done two years.” Her local school was a partner of the college in New York, allowing her to transfer into the overseas Bachelors programme. She was able to get a partial scholarship of US $1,000 dollars, but tuition was still US$21,000 per year after this. However, the real issue was the high cost of living.

Carla took the decision to accelerate her programme, doing several more credits than the average student and finishing the course in a year. “The less time you spend, is the less time spend on housing so your costs will go down.”

Her mother, a senior public servant, used an insurance policy as collateral to borrow $150,000, which they thought would cover her costs. Carla admitted they underestimated what she would need which, at times, led to difficulty. US student visa requirements are such that, in most circumstances, it is illegal to find work off campus and Carla said jobs on campus were at a premium. When giving advice to other prospective internationals, she said as collateral, cash was king with banks.

“We would have been able to borrow more if we had liquid cash in a fixed deposit. If we defaulted on the loan, it would have been harder for them to get their money back from the insurance policy. If you provide cash, you can also negotiate a lower rate with the bank on the loan.”

Lisa and Tim, were both the recipients of partial scholarships to their Ivy League school. Even with those, coming up with the remainder was crippling. Where attendance at a regular college may run a prospective student into the US $20,000-$30,000 range, the Ivy League is, literally, in a class by itself. “The entire sum was around half a million in TT dollars,” said Lisa.

This is the equivalent of US$80,000. In addition to the partial, covering half of this, Lisa was able to get US$25,000 from a civil society organisation. An aunt would fully secure a loan for TT $116,000 to make up the rest of tuition, as well as something extra for expenses. Lisa said the bank is still holding her aunt’s fixed deposits as collateral as she works to pay off the loan over the next three years. Her installment is TT$2,300 a month.

Tim’s mother and father also split the expenses between them. His mother paid for his room and board and his father paid the tuition that the scholarship did not cover. Tim said his father took a loan, but he was unsure of the details. Tim was able to write freelance while in New York, earning around US$300 a month. Both Lisa and Tim thought the investment was well worth it.

Alumni network
“You are not paying for the degree so much, as to be a member of the alumni network, because alums will hire alums,” said Lisa. Tim said the Ivy League degree would give him enhanced marketability, not just home, but abroad as well. He said, “I don’t want to work in Trinidad all my life.” 

Janice did her undergraduate degree in Jamaica, where she was able to take advantage of a favourable exchange rate. To do her graduate studies in London, she would borrow the US equivalent of £12,000 from her mother, who works at a nurse in the States. Kavita, meanwhile, was a resident of Canada and was able to use her status to get lower fees for both her undergraduate and graduate studies.

Republic Bank representative, Sarah Lalla, who was present at the US Information Service seminar, presented another option: that turning the equity in one’s home into cold hard cash. “Mortgages are really simple in the sense that if you already have a mortgage with us. Let us say that your parents have a mortgage of $300,000, but the property is worth $700,000, you can use the equity on it, which is $400,000.”

This choice has its limits. The life of the loan can only extend to the life of the mortgage itself. To illustrate, if one’s mortgage has five years remaining, then the loan has to paid off in that five years as well. Lalla also advised that people not take loans with several different financial organsations. If you bank at one institution, expenses can be consolidated into one payment every month with a much lower rate of interest, than having several payments to make at different institutions at higher rates of interest.

Several institutions in the US will also loan international students money to complete their studies once the have a credit worthy co-signor who is a US citizen. In Canada, there are a number of government organisations that provide loans, with low rates of interest and generous repayment terms to internationals. Janice, who studied in the UK, told the Sunday BG that while the UK government provided aid to EU students, other internationals were largely left to fend for themselves.

“I think I was much better off than most people I was studying with, because my mother was able to give me that loan. I had a little extra to play with,” she said. But what do you do when neither you nor your relatives have home equity, insurance or other financial assets that can secure them a loan ? In this case, options would be limited to receiving a scholarship. In this venture, McLaren said research was key. The de-centralised nature of the US higher education system presents more opportunities, he said.

Early planning
“What that means is that there is no one place to access scholarships or financial aid. That’s why it’s a research intensive project. Scholarships are available for academic achievement, athletic achievement. They are available for need. They are even available for things people wouldn't even, in fact, consider.” Early planning for children's education helps. 

One communications professional the Sunday BG spoke with said when each of her two children was born she opened a “college” fund. She said that over the course of the next 18 to 20 years, small contributions to the fund would allow her children to have an overseas education, even in a low interest rate environment. She uses the services of a financial planner, who advised her to “reassess the fund on a periodic basis to ensure that total funding stays ahead of increasing costs.”