How I took the first step to prepare for my child's college education
Ensuring that your pre-schooler graduates from college is a daunting task! Here's why you should prepare for your child's education expenses too!
Graduation is a special occasion for Filipino families. Education is so important to us because we know that it will equip our children with the skills needed to thrive in an increasingly complex world. One of my friends has a son who just graduated from grade school and they even invited us to celebrate the milestone with them. Preschools have Moving Up days that imitate graduating from college – complete with little caps and togas. “Makapagtapos sa pag-aaral” is a dream shared both by parents and their children.
But between pre-school and the finish line, a lot of bridges need to be crossed. As a mom of an incoming first grader, I experienced firsthand how difficult it is to choose the best “big school.” Understanding the difference between traditional and progressive, determining whether there are good options nearby or if relocating the family is necessary, and finding the best value education that the family can afford are just some of the factors we considered.
I know that sooner rather than later, it will be time to choose majors and universities! My daughter is only six years old right now but those six years just flew by so quickly. The 12 years between now and sending her off to college will probably pass by in a flash too. So what’s the best way to prepare for tomorrow?
Preparation Is Key
The future is difficult to predict – What will my child be interested in? What kinds of jobs will be available? What will higher education be like? I don’t know the answers to these questions yet. But one thing is clear – all good things come with a price, including education.
After all, it’s one thing to have a dream college, but another thing entirely to have the financial capacity to send them there. Did you know that, since 1992, undergrad tuition fees increased by more than 2,000 percent?1 So if the average tuition fee per unit (in NCR) was P1,277 last year,2 it used to be just P60.25 years earlier! On average, that’s an annual increase of 13%; in other words, it doubled every six years.
Although setting aside money for all future needs sounds like a good enough plan, let’s walk through some possible scenarios: What if I don’t save enough? What happens if something bad happens to the family breadwinner? And what happens if my savings are inadvertently spent, for example, because of a medical family emergency? Hoping for the best while preparing for the worst will help secure my children’s future.
In case you were wondering, yes, #TheresAnAppforThat!
Say Hello to GradMaker
From hailing rides to online banking, apps are such a big part of modern life because they make everything easier to access. The GradMaker makes investing and insuring our children’s education simpler and more convenient.
GradMaker is the first direct-to-consumer insurance app, developed by Manulife, in the Philippines. To be honest, when I was first asked to try the app so I could share my thoughts about it, I was wary because I thought it was a pre-need education plan. After the crash of a few companies offering such products about 15 years ago, the market definitely needed something different. Fortunately, Manulife’s GradMaker works using a different business model.
After going through it, I found GradMaker to be a simple, powerful, and flexible investment app. Let’s see how it works:
GradMaker Is Simple
GradMaker is a simple and straightforward app that allows its users to purchase investment-linked insurance that puts money in a pooled fund, the Peso Dynamic Allocation Fund, this fund is managed professionally by a fund manager, in this case, Manulife Asset Management and Trust Co. Similar to Mutual Funds, investors don’t have to decide which stocks or bonds to buy or sell – the fund manager does it on our behalf. I don’t have the time nor the know-how to do it myself, so this is a welcome relief. I’m scared about investing, knowing that there’s a degree of risk involved, but the simplicity of the app reduces that fear. Besides, the thought of not being able to fund my child’s education sounds even scarier.
GradMaker Is Powerful
Knowing if we’re saving enough and that our child’s education is protected in case something happens to us is powerful stuff.
1. It provides information to help parents make better decisions.
They say knowledge is power and the app gives us information we can act on. It’s not just informative in a general sense; the data it provides is customized according to each child’s age, which university is chosen and even the amount that the family can invest right now.
The numbers are presented so well that even those who aren’t financially savvy can easily grasp the projections. For example, it showed me that if I make an annual investment of P10,000 and keep it invested for about eight years, it will cover less than 10% of one kid’s projected college tuition. But if I make an annual investment of P120,000 (the maximum allowable amount per transaction) and keep it invested for the same time period, it could cover more than 80% already. If I choose a different university, the numbers change accordingly.
Similar to investing in mutual funds, these amounts aren’t guaranteed, but the app clearly explains how the projections are computed (e.g. 10% annual tuition rate increase). Having this kind of information without needing to spend so much time researching and being able to adjust the different variables (amount, number of years, school) makes it a very powerful tool.
2. It has life insurance, just in case something happens to you.
Unlike investment-only products, GradMaker* has an insurance component. In case something happens to me, my beneficiaries will receive 125% of the premiums paid or your account value – whichever is higher!
GradMaker Is Flexible
We are fully in control over when, how much and how often we want to invest. We can even decide if we want to invest in something other than education.
1. Single-pay is the way!
Yes! GradMaker doesn’t force you to pay every month or even every year, even as it shows you projections of how much your investment will earn if you put in money annually. It doesn’t work in the same way as policies that require regular contributions or top-ups. Let’s face it, we get insurance because life can be pretty unpredictable. So we might not have the same disposable income available over the next 10 years.
2. It’s literally at the tip of our fingers.
Because the plan doesn’t need to course through an agent, we decide when we want to access the app, digest the information available and buy – or not! I didn’t feel pressured to get a plan for the sake of friendship and I was able to mull over the information without feeling rushed.
Anyway, the app allowed me to DIY (do-it-myself) through the inserted answers to FAQ’s and well-placed definitions of terms. Checking the current fund value and pulling out funds can be done through the app as well.
3. GradMaker can benefit others too.
While the app is called “GradMaker,” it doesn’t actually limit you to investing for education. Even non-parents can use the app to purchase a plan. Whether it’s a travel or retirement fund, the convenience of the app and the benefits of investing in a pooled fund while being insured are the same.
Do you know what’s even sweeter? The value of the app doesn’t just extend to the plan beneficiaries either. I learned that, for every investment you make, Manulife will match it by donating an amount equivalent to 1% of investments made via GradMaker to Cartwheel Foundation. Cartwheel strives to provide quality education for indigenous children in the Philippines. This charity has initiatives to provide quality education for indigenous children. So it’s not limited to preparing for our children’s future but making that future better for other children too.
GradMaker Prepares Us and Our Children for the Future
We may not know what our kids will want to be by the time they finish high school (right now, my youngest wants to be a dinosaur mascot) and the jobs of the future might look very different from jobs today. But financially preparing for the future doesn’t have to be part of the unknowns that we parents have to manage.
If you’re not sure how much you will need to send your child to university or you just don’t have enough time to figure out how to start saving up for that, then GradMaker, available for download in both the AppStore and Google Play, is the app for you. Let’s not stop at dreaming and start securing our dreams for our children’s future. Prepare for your child’s education expenses now!
Ready? Simply download the app, and complete the sign-up process to pre-fill the basic information needed for your policy. But don’t worry, you don’t need to invest just yet. Make sure to grab your TIN, SSS number, valid government ID, and a utility bill for this part! Once you’re ready to invest, you can take out your credit/debit card and pay straight on the app!
*GradMaker is a Variable Life Insurance Product.