UM Surabaya Lecturer Shares Tips on Preparing Children's College Capital for Workers Under 5 Million

• 05 Jul
• 2023

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UM Surabaya Lecturer Shares Tips on Preparing Children's College Capital for Workers Under 5 Million

• Article
• By Uswah Sahal
• Economy
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Every parent definitely wants the best education for their children up to the tertiary level. The cost of education in Indonesia tends to be expensive every year. One of them is due to the inflation factor of around 15-20% per year. So it is not wrong if one of the main factors causing the increase in dropout rates in Indonesia is the economic factor.

Data from the Central Statistics Agency (BPS) states that the dropout rate in Indonesia will increase in 2022 which occurs evenly at all levels of education. With details of the dropout rate at the high school level reaching 1.38%, the junior high school level was recorded at 1.06%, the elementary level was 0.13%. Of the three levels of education, the largest increase in the dropout rate was recorded at the high school level of 0.26%. That is, the percentage of dropouts at tertiary level is very likely to be much higher.

Arin Setyowati, a Lecturer in Sharia Banking at UM Surabaya, said that parents who have a mediocre salary need to do careful planning so that they can facilitate their children to receive higher education.

Here are some tips on preparing children's college capital, especially for workers whose salary is under 5 million;

First, dig up information about the tuition fees of several campuses that will be addressed. This step is intended to determine the ideal standard of service, quality and financial strength of parents for their children's education. From several alternative colleges with certain educational costs in the year when conducting research, information can be used as a basis for calculating estimated tuition fees when a child enters college education.

Second, draft a child's tuition fee. After conducting information research, the next step is to design a tuition fee plan that will be required within a period that is appropriate to the child's age.

“For example, the education and development funds to graduate from study program X at a university amount to IDR 100 million. Then the estimated education inflation is around 3 percent per year and children will go to college in 17 years, so the funds needed are around IDR 165 million,” said Arin Wednesday (5/7/23)

This means that parents have approximately 17 years of age, so it is best to save an amount of Rp. 9.7 million per year, or around Rp. 880 thousand per month. So, from these figures it can facilitate the preparation of plans for children's college fees that can be prepared.

Third, allocate and set aside special funds for children's education from an early age. The next step is to prioritize the allocation of salaries every month. So that the tuition savings account does not interfere with the allocation of costs for basic needs, emergency funds, pension funds, and other expenditure items.

"The method is of course consistent in determining what percentage specifically for the child's college expenses post, from 10% to 20% of the monthly salary can be allocated for the child's monthly tuition bill post. For example, if the monthly salary is 5 million rupiah, then around 500 thousand to 1 million rupiah is set aside for the child's tuition bill post," he added.

If this figure is deemed insufficient, it is necessary to rearrange the allocation of funds while optimizing other sources of income.

Fourth, choose the right and safe investment instrument. In addition to providing a special budget item for saving children's education funds from a monthly salary, parents can also take advantage of investment instruments that can be selected according to the timeframe and the character of the investment needed. Adjusted to the calculation of the potential profit, risk and legality of the investment product to be selected. So carefulness is needed in determining the investment product that will be used.

For investing in children's education funds, it is better to choose a low risk instrument with a middle return potential and a level of assurance that the investment fund is safe, for example using a mutual fund instrument.

Fifth, prepare protection. Setting up protection for children's tuition fees is intended so that if there is a risk to life such as a parent's illness or death (which is unexpected), then the education funds that have been prepared are still available and can be accessed to finance children's education. The forms of protection here can be prepared, one of which can be through education insurance based on life insurance.

Sixth, focus on saving and regular financial evaluations. In the course of household finances, it is certainly not always healthy and fine.

"So it takes a strong commitment and consistency from parents so that they always focus on allocating a portion of the monthly salary for children's education posts," concluded Arin.