Calculating a College Degree's True Value

How much is a college diploma actually worth? The perennial question asked by every former English, philosophy, and art history major now has an answer in some states. For University of Virginia students, it pays to major in engineering—$60,300, on average, 18 months after graduation—rather than sociology ($33,154), or worse, biology ($27,209). In Tennessee, a graduate of Dyersburg State Community College with an associate’s degree in health earns an average $5,000 more than someone who majored in health and picked up a bachelor’s at the University of Tennessee at Knoxville, the state’s flagship school.

With tuition and student debt skyrocketing and dim job prospects awaiting many graduates, states are trying to show residents what kind of return they can realistically expect for investing in a degree from a public college or university. That’s why Virginia, Tennessee, and Arkansas are collecting salary data on their graduates and posting it online at CollegeMeasures.org, a website run by a former education official in the Bush administration. The database, which doesn’t reveal any names or other identifying information, shows students how much money they can expect to earn based on the major and school they choose. Colorado, Nevada, and Texas will also begin using it in early 2013.

“What we want is for students to make informed decisions,” says Tod Massa, director of policy research and data warehousing at Virginia’s State Council of Higher Education. Massa, who’d been pushing for such a database for years, had little success until 2011, when the Virginia legislature passed a law mandating that the state publish salary data for graduates of all colleges and universities, public and private. Schools “need to coordinate their level of student borrowing with [students’] likely ability to repay,” Massa says. Virginia shares its information with CollegeMeasures and operates its own website, publishing data for graduates up to five years out of school.

http://www.businessweek.com/articles/2012-12-20/calculating-a-college-degrees-true-value#r=nav-r-story

The Myth of 'Good' Debt

By David Francis
Apr 27, 2012

The economic crisis and the tepid pace of the recovery have left millions of Americans deep in debt. And amid this slow recovery, many are struggling to make minimum payments to keep ahead of creditors.

The amount of debt the average American holds is staggering, compared with the average American salary. In its latest findings in 2010, the Social Security Administration calculated the average American wage index to be $41,673.83.

According to Creditcards.com, a website that tracks the credit card industry, the average American household holds $15,956 in credit card debt. The Census Bureau has determined than 60 percent of Americans own their homes; many of these people still owe money to a bank for mortgage payments. Estimates on the size of these payments vary, but most organizations say the majority of monthly payments fall between $700 and $1,700 per month.

[Related: Is A College Degree Worth It?]

On top of that, most Americans have to borrow money to buy a car. According to the auto website Edmunds.com, monthly car payments should average between 8 and 11 percent of monthly income, although many people pay more. College students are also forced to take out loans to pay for education. The Project on Student Debt has found that the average graduate of a four-year nonprofit university carries more than $25,000 in loans.

Based on these numbers, it seems almost impossible for the average American to be debt-free. But there are steep variations among these loans. Paying off some loans should be a priority. Others, while burdensome, can wait.

Better debt vs. worse debt.
Prior to the Great Recession, many financial experts differentiated between "good" debt and "bad" debt. The former included loans with low interest rates, such as a home loan. Because the value of a home presumably appreciated over time, the debt helped the borrower work toward building wealth. "Bad" debt included credit card loans, or loans taken out to pay for things that current cash reserves couldn't cover. The value of the product purchased with the credit card immediately depreciates upon purchase, while the money placed on the credit card immediately begins to accrue interest.

But according to David Bach, author of the Finish Rich book series and founder of www.FinishRich.com, the financial downturn changed these perceptions. "Good debt and bad debt is almost a myth that we were sold for 20 years," Bach says. "There's just debt. For the most part, debt is basically bad and difficult. It comes down to the interest rate."

Debt now seems to fall into two new categories: better debt and worse debt. Better debt is a loan with a low interest rate used to purchase something that adds value. Worse debt is used to buy a depreciating asset or debt used as a substitute for cash. A home loan, according to Bach, is an example of better debt.

"For the most part, most people have to borrow money to buy a home. The key is if you borrow money to buy a home, the faster you pay that loan off, the faster you're free," Bach says.

[Related: How to Use the IRS as a Credit Card]

The Catch-22 of debt is that one needs to go into debt to be considered a credit-worthy borrower with the ability to pay off large loans. Rod Ebrahimi, founder and CEO of ReadyforZero, a website that helps people plan to get out of debt, says establishing a good credit score is imperative for transitioning out of college. "A good debt you could have had through college is a credit card you had going into college and never carried a large balance," he says. "It may actually make sense to have some history."

However, Bach warns that this kind of debt can quickly become burdensome if the cardholder doesn't manage it responsibly. "If you're going to borrow money on your credit card, the goal should to be pay it off in full at the end of the month," Bach says. "Don't get stuck in the trap of paying minimum payments. Pay off these cards as fast as possible."

Making sound education decisions.
Ebrahimi says the growing student loan burden and the poor state of the economy, especially for young people, means students must approach student loans differently. They are often necessary, but one needs to be strategic in how they are used. He warns against using loans at for-profit universities, which promise much but often fail to deliver jobs that allow students to pay off their loans.

"At for-profit schools, you can get all kinds of degrees and you end up with six-figure debt, then can't find a job that allows you to pay them," he says.

He adds that loans should also be used strategically at nonprofit universities. "There can be good and bad students loans" at nonprofit universities, Ebrahimi says. "Many people believe they can pay at any university," but often, payments at state school are easier to manage.

http://finance.yahoo.com/news/myth-good-debt-170611202.html

5 Ways To Fund A College Education

According to CNNMoney, the average tuition cost at the average public university rose over 8% in 2011. The following tips are designed to dissuade you from skipping college because you think you can't afford it, and to show you some strategies for making higher education expenses fit into your budget.

Choose Your School 

Go to an in-state public school or a public school in a surrounding state that has reciprocity for reduced tuition, which will be much lower than rates at a non-reciprocal out-of-state public school or a private school. If you are not satisfied with the quality of the state schools where you live, consider moving to a state with schools you like and establishing residency.

To establish residency, you will have to meet strict requirements that vary by state and sometimes even by school - but for the savings, it may be worth it. Most states require you to live in the state for at least one year in order to be eligible, but there are other criteria to meet as well. In California, for example, it is very difficult for students who don't have a parent living in California to establish residency before their mid-20s. In addition to living in-state for 366 days immediately prior to requesting resident status, potential students must provide objective documentation demonstrating an intent to make California their permanent state of residence, such as a driver's license, ownership of property or steady employment, as well as financial independence.

If you can wait it out and meet these criteria, then you can attend quality schools at in-state rates. 

Another money-saving strategy that doesn't involve postponing college is to apply to schools that have a shortage of people like you. People like you could be people interested in your major, people from your state, people with your ethnic background, people who are as smart as or smarter than others applying to the school, people who play the unusual instrument you play or any other number of traits. Schools where you'd be a unique addition may give you scholarships.

Think About Cost of Living

Keep in mind that housing and other living costs will vary by location, especially if you choose to live off campus. An apartment in New York City will be much pricier than an apartment in the Midwest. Also, the college where you obtain your undergraduate degree can sometimes influence where you will end up working and living after school. If possible, choose a location where you'd actually want to live, where the cost of living is affordable, and where your school will be a recognizable name that will allow you to get more mileage from your diploma. UCLA may be considered a good school in the West, but may not be held in the same high regard in New York.

Don't Get Just Any Job to Pay for School

Make your job count by sticking to high-paying work. To find high-paying work, especially for summer jobs when you'll be free during business hours, seek out office jobs through temp agencies. Temp agencies do most of the job hunting work for you, and the office jobs they offer tend to pay above minimum wage, provide work experience closer to the situations you'll encounter post-college, and may give you connections that will help you land a meaningful internship or your first salaried position. Also, despite what the name implies, you can find both short and long-term jobs through temp agencies.

If you can't get a high-paying job, get a job that will keep your living expenses down, such as working in a restaurant where you get free food. If you work at a bakery, for example, any unsold goods at the end of the day may be fair game for employees since the business can't sell day-old bread. Another possibility is to find a campus job that offers perks. If you can get a job in your school's residential life office, you may be able to get a discount on housing during the school year or the summer.

If you're still in high school, start working now and save all your paychecks for college. You're still living at home; you probably don't have high living expenses chomping into your earnings like you will later on. Also, see if your high school has a program that will allow you to leave school at noon every day to go to work during your senior year. This will increase your job options, including opening up the possibility of the aforementioned office job, and allow you to work more hours.

Be Flexible with Your Schedule

Some college programs, such as engineering, are more intense than others, making it quite difficult to work while in school. For these programs, consider attending school part-time so you can still work part-time. Even if you're not in an overly demanding program, attending school part-time can help you spread out tuition costs and free up more time to work. However, part-time students may not have the option of living on campus, which can make it more difficult to be involved in the social aspects of college.

Wait

Another option is to take a year or two off after high school to work full-time so you can save up enough money to make school affordable. If you don't want to postpone college, you could take your classes during evenings and weekends in order to work full-time during the week. This strategy may take more than four years to complete, but it can be easier to budget. One argument against this approach is that many people find it easier psychologically to go straight from high school to college because study habits are still ingrained.

With education costs as high as they are and certain financial situations that fall outside the norm, even some middle-class parents may not be able to make significant contributions to a child's higher education costs despite what the formulas insist.

If you have a lot of patience, you can wait until you become an independent student as defined by the Higher Education Act, which has a different definition of "dependent" than the Internal Revenue Service (IRS). If you identify with some of the following you may qualify as an independent student.

• 24 years or older by December 31 of the award year
  
• Orphan or ward of the court
  
• Armed Forces Veteran or serving actively
  
• Graduate or professional student
  
• Married
  
• Dependents other than a spouse
  
• Student for whom a financial aid administrator makes a documented determination of independence by reason of other unusual circumstances

Being an "independent student" under the Higher Education Act could make you be eligible for more financial aid because the financial aid formulas applied to this group won't take parental contributions into account.


The Bottom Line

Some of these measures are purely practical and don't take into account many of the intangibles of the college experience, such as the learning experience of freshman dorm life. Before you start on your college plan, consider everything you want to get out of college so that you don't have regrets later. Although you may have to make some sacrifices that your peers don't, such as starting school later or staying in the state, you can still have the experience you want and attain a degree that will lead to a financially successful and stable future.

Read more: http://www.investopedia.com/articles/pf/08/affordable-college-education.asp#ixzz28JV1tjSu

September 14, 2012, 6:00 AM91 Comments

The Debt of Medical Students

By UWE E. REINHARDT

Correction Appended

Uwe E. Reinhardt is an economics professor at Princeton. He has some financial interests in the health care field.

In debates on health work force policy, it is frequently argued that medical education is a public good, because it benefits society as a whole.

TODAY’S ECONOMIST

Perspectives from expert contributors.

The implication is that tuition charges at medical schools should be zero or close to zero. Many nations in the industrialized world follow that policy, although they have also kept tuition low for most college students.

Most economists disagree with characterizing higher education as a public good. Only the individual receiving a professional education – including the M.D. degree — owns the human capital that the graduation documents certify to exist.

Medical graduates can use their human capital any way they wish. They can treat patients, do medical research or use their knowledge as business consultants to health-related companies or as financial analysts in the financial markets, as some of them do.

There may be some positive spillover for society as a whole from having this privately owned human capital produced, and these effects (calledexternalities by economists) might warrant some public subsidies toward the production of that human capital. That argument could be extended to many other forms of human capital, as well — e.g., engineers, scientists, nurses.

According to a fact sheet published by the American Association of Medical Colleges, annual tuition and fees at public medical schools in 2011-12 amounted to $30,753, and the total cost of attendance was $51,300. The comparable averages for private medical schools were $48,258 and $69,738. To most Americans, these will seem staggering amounts.

Which brings me to the sizable debt with which, almost uniquely in the world, American medical students now graduate. The association routinely collects data on these debts. A good summary of the most recent data, for 2010, can be found on the previously identified fact sheet, and I created this table from that source.

American Association of Medical Colleges

As the table shows, some of the students’ accumulated debt by time of graduation from medical school was incurred to finance a liberal arts undergraduate education. The $18,000 shown in the table is actually on the low side. According to the Project on Student Debt, college seniors who graduated in 2010 had an average debt of $25,250, with a range among campuses of $950 to $55,250 a student. Individual students at private colleges may have even larger debts. And debt collectors are doing a thriving business collecting these debts.

Amortization of the large debt accumulated by medical students will clearly take a bite of the income they will earn in medical practice. But at least there will be a sizable future income stream to absorb the hit. Many other college graduates have much smaller incomes or are in even direr straits.

The table below conveys a rough indication of what the amortization of medical-school debt might mean for individual students.

In this table I have assumed that the student modeled here had average debt of $161,300 upon graduation from medical school. From that debt I deducted $24,400, the amount to which $18,000 of debt upon graduation from a liberal arts college would grow in four years at a compound interest rate of 7.9 percent (that’s at the high end of the interest rate medical students are charged on debt). The remainder is debt related strictly to the medical education of the student.

I assume that after residency, the practicing physician has a starting net income (after practice costs) of $150,000 or $300,000, and that these incomes will grow at an annual compound growth rate of 3.5 percent over time. Physician incomes vary considerably across specialties and even within specialties.

To get a feel for the data, readers may want to look at several surveys ofdoctors’ pay.

According to the association’s fact sheet, students pay an interest rate of 6.8 percent on Stafford loans; for lower-income students, the rate is a subsidized 3.4 percent. For Direct Plus loans, students or their parents pay a rate of 7.9 percent, the rate I used in the table.

Finally, I assume two distinct amortization models. Under one, students pay back their debt with flat annual (or monthly) payments over 20 years. That payment is $13,840 a year. Under the alternative approach, the annual amortization payment rises in step with the assumed annual increase in physician income. The first annual payment in that approach is $10,659.

The data in the table represent these annual debt-amortization payments as a percentage of physician net income in years one, 10 and 20 of medical practice.

Clearly, these payments are a noticeable burden, even over 20 years. For amortization over 10 years, they would naturally be higher. On the other hand, the numbers would decline sharply with reductions in the interest rate charged. The table below illustrates the sensitivity of the first-year payment to interest rates and amortization horizon for the payment stream that increases in step with assumed increases in practice income.

The annual amortization payments would be particularly burdensome for primary care physicians, with their relatively lower incomes. That fact is a potential policy lever Congress might employ if it took seriously people’s lament that America is suffering from an acute shortage of primary care physicians.

I shall muse about that and other options in a future post.

---

Correction: September 15, 2012

Because of an editing error, an earlier summary with this post misstated the author's view of subsidies for medical education. He writes that medical education is no more worthy of public subsidies than other professional preparation, not that it might warrant subsidies.


http://economix.blogs.nytimes.com/2012/09/14/the-debt-of-medical-students/

Warren Buffett - How to Increase Your Income by 50%

Is It Better To Be Book Smart Or Street Smart?

June 20, 2012

If you ask most people this question, you're likely to get answers that go down party lines. Those without advanced education will likely say that they've done just fine without spending a lot of time in the classroom, while people with a lot of formal academic knowledge would say that success is largely the result of education. This is more than a trivial debate. Recent statistics from the Federal Reverse show that the American middle class has seen its net income drop 40% from 2007-2010. What was an average net worth of $126,400 shrunk to $77,300 in 2010. Even worse, the Pew Charitable Trusts' Economic Mobility Project found that 42% of people whose father was in the bottom fifth of the earning curve remained in the same earning bracket for life. Only 30% of Britons and 25% of Danes and Swedes were destined to the same fate. This has led some people to believe that America isn't the land of opportunity it once was. Americans in the now-popular 99% are not only upset that the divide between rich and poor continues to widen, they want to know how they can assure a better life for themselves and their families. Is a
better paying job impossible without a formal education, or is there hope for the non-college educated?

Steve Jobs, co-founder of Apple, is widely regarded as one of the best business men of his day. He didn't have a college degree and neither did Steve Wozniak, the other founder of Apple. Other successful businessmen without college degrees include Dell Computer founder Michael Dell, Microsoft founder Bill Gates and Virgin Brands founder Richard Branson. People all over the world have found success without a college degree, but is that the rule or the exception? Unemployment data shows that more than 8% of the population looking for a job can't find one. However, for those with a bachelor's degree, the unemployment rate is only 3.9%. The unemployment rate is 13% for people without a high school diploma. A college degree doesn't guarantee success, but BLS unemployment statistics show book smarts more than double your chances of finding a job.


Who Works Harder?
One side believes that book smarts allows you to get a higher-earning job and work less, while poorer Americans remain poor because they are forced to work more hours for less money. A paper by Orazio Attanasio, Erik Hurst and Luigi Pistaferri found that higher-educated people work more hours than poorer income groups. Although income inequality is growing, leisure inequality is growing, too. While higher earners are earning more, they're losing more leisure time in order to do it. Lower-educated men had 35.2 hours of weekly leisure time (socializing, gaming, watching TV, etc.) compared to 35 hours when the study was last conducted. Higher-earning men had 33.2 hours compared to 34.4 hours previously. Less educated women saw their leisure time grow to 35.2 hours from 35 hours. Higher-educated women went down to 30.3 hours compared to the previously reported 32.2 hours. The study mentions that some of the increase in hours at the lower income levels comes from increased unemployment, but only half of the increase could be attributed to that.


The Bottom Line
Some consumer finance experts believe that becoming more financially prosperous is as much a function of cost control as it is advanced degrees and higher-paying jobs. Statistics seem to indicate that more education dramatically increases a person's chances of achieving financial prosperity, but one basic rule remains largely uncontested: a college degree may help to open doors to a better paying job, but hard work and responsible choices is the best path to career and financial success.

by Tim Parker

http://www.investopedia.com/financial-edge/0612/Is-It-Better-To-Be-Book-Smart-Or-Street-Smart.aspx#axzz1yNRqRlmR

Why College Isn't for Everyone

By Richard Vedder on April 09, 2012

A person who compares the annual earnings of college and high school graduates would no doubt conclude that higher education is a good investment—the present value of the college earnings premium (the better part of $1 million) seemingly far outdistances college costs, yielding a high rate of return. But for many, attending college is unequivocally not the right decision on purely economic grounds.

First of all, college graduates on average are smarter and have better work habits than high school graduates. Those who graduated from college were better students in high school, for example. Thus, at least a portion of the earnings premium associated with college has nothing to do with college per se, but rather with other traits.

Second, a goodly proportion (more than 40 percent) of those attending four-year colleges full-time fail to graduate, even within six years. At some colleges, the dropout rate is strikingly higher. While college students sometimes still gain marketable skills from partial attendance, others end up taking jobs that are often given to high school graduates, making little more money but having college debts and some lost earnings accrued while unsuccessfully pursing a degree.

Third, not everyone is average. A non-swimmer trying to cross a stream that on average is three feet deep might drown because part of the stream is seven feet in depth. The same kind of thing sometimes happens to college graduates too entranced by statistics on averages. Earnings vary considerably between the graduates of different schools, and within schools, earnings differ a great deal between majors. Accounting, computer science, and engineering majors, for example, almost always make more than those majoring in education, social work, or ethnic studies.

Fourth, the number of new college graduates far exceeds the growth in the number of technical, managerial, and professional jobs where graduates traditionally have gravitated. As a consequence, we have a new phenomenon: underemployed college graduates doing jobs historically performed by those with much less education. We have, for example, more than 100,000 janitors with college degrees, and 16,000 degree-holding parking lot attendants.

Does this mean no one should go to college? Of course not. First of all, college is more than training for a career, and many might benefit from the social and non-purely academic aspects of advanced schooling, even if the rate of return on college as a financial investment is low. Second, high school students with certain attributes are far less likely to drop out of school, and are likely to equal or excel the average statistics.

Students who do well in high school and on college entrance exams are much more likely to graduate. Those going to private schools may pay more in tuition, but they also have lower dropout rates. Those majoring in some subjects, such as education or one of the humanities, can sometimes improve their job situation by double majoring or earning a minor in, say, economics.

As a general rule, I would say graduates in the top quarter of their class at a high-quality high school should go on to a four-year degree program, while those in the bottom quarter of their class at a high school with a mediocre educational reputation should not (opting instead for alternative methods of credentialing and training).

Those in between should consider perhaps doing a two-year program and then transferring to a four-year school. There are, of course, exceptions to this rule, but it is important for us to keep in mind that college is not for everyone.


Richard Vedder directs the Center for College Affordability and Productivity and teaches economic at Ohio University

http://www.businessweek.com/articles/2012-04-09/why-college-isnt-for-everyone

Why not start a portfolio for your child, like Simple Soul does for his daughter, Nora?

[quote author=soulsimple link=topic=27804.msg735122#msg735122 date=1328783721]
http://www.investlah.com/forum/index.php/topic,27804.0.html
goals for her portfolio.
after she was borned i started a little portfolio for her. hope that it grows well till she is 20. simple goal of 15% returns yearly. hope to add funds yearly into it(on top of dividends received) n might diversify into diff assets as time n opportunity permits.
how she is faring ok(i guess). pls feel free to share your opinions.
 :)
[/quote]


Nora was born on 8.9.2011.  Her father, Simple Soul started a portfolio for her.  Here is her portfolio.
http://www.investlah.com/forum/index.php/topic,27804.msg735140.html#msg735140

                 Avg. Price         9.3.2012           % Gain

Dlady............RM 19.8 ......RM.29.9............ 51.01%

GuanChg......... 2.183...........2.61...........19.56%

LPI..................12.29..........13.62..........10.82%

Nestle..............47.46..........56.24..........18.50%

Padini.............. 0.998..........1.52............52.30%

PetDag.............16.02..........18.36.........14.61%

UtdPlt.............. 17.36...........25............. 44.01%

Let's have a good look.  It is a portfolio of 7 stocks that are highly selected, that is, a concentrated portfolio.  5 of these stocks are from the consumer sector (Dlady, GuanChg, Nestle, Padini and PetDag), 1 from the insurance sector and 1 from the plantation sector.

All these companies are growing their revenues and earnings year on year.  Their businesses also throw up a lot of free cash flows.  All give dividends.  Another feature common to all these companies is they are growth companies, growing at various rates.  

What about their durable competitive advantage and economic moats?  Yes, these businesses, except UtdPlt do have these qualities.  UtdPlt is a well run plantation company and presently enjoy the good returns due to the high price from the crude palm oil.  CPO prices can be cyclical and CPO is traded like a commodity with its price determined by supply and demand.

By buying these companies at a time when the market was down in September 2011 and last quarter of 2011, Simple Soul has managed to buy these wonderful companies at fair or bargain prices.  The market is often volatile and in the short run, psychological factors drive stock prices.  However, over the long term, the stock prices are driven by fundamental factors.  By staying with wonderful companies with durable competitive advantage and economic moat, this portfolio is well constructed to protect against any downside risk and with a promise of a fairly good return.

Let's study the gains of the individual companies in this portfolio over this short period since its inception in September.  For the smart and shrewd investor, the like of Simple Soul, it is comforting to know that he can find bargains in September when everyone was leaving the market in disgust.  But this isn't surprising for someone who practises value investing.  Another point of note is to realise that it is not uncommon to see a stock price going up 50% or down the equivalent 30% within a short period of 1 year.  3 stocks in this portfolio have gone up about 50%.  The gains in the other 4 stocks are in the teens.  Who said that you have to invest in "lousy" penny stocks to seek such gains?  

However, the long term performance of this fairly concentrated portfolio will track the earnings growth of the individual stocks.  For this, Simple Soul has certainly selected his stocks well.

This is a story of a caring father who is investing for his daughter Nora.  Warren Buffett started his investing at the age of 13 years, and seriously so in his early 20s.  As Nora has a good 20 years headstart in her investing career and knowing the power of compounding, I shudder to project her networth when she too reaches her age of 80s. :-)

Well, Nora will realise someday how lucky she is having a caring father who has such a foresight.  Happy Investing to Simple Soul, 

5 ways to finance an education

http://www.theedgemalaysia.com/personal-finance/188533-5-ways-to-finance-an-education.html

Saving for studies and taking the right financial decisions

Meghna Khanna has just got her first job after graduation. She plans to work for a few years before going back to school to get a management degree. She likes spending, but is equally keen to save for her studies. Though her parents live comfortably, they are not wealthy enough to fully fund her education. Allocating a large sum towards higher studies will compromise their other goals, but they will help her as much as they can. Meghna is tempted to leave home and fend for herself now that she is employed. She likes her financial independence, but wants to be sure that she does not take wrong decisions when it comes to money matters. What should she do?

Meghna's key goal is to fund her higher education, but she must first ascertain whether her saving would be adequate to cover the cost. She should clock a conservative rate of return by using a bank deposit rate on her investments in which she will deploy her savings. For the balance amount, she can seek a bank loan. She should choose a management school that has a good placement record, so she can hope to repay the loan without any difficulty. Since her parents are willing to support her routine needs, Meghna should use this to increase her monthly savings. She should not move out on an impulse as it would significantly increase her expenses and reduce her ability to save. For her parents, this arrangement would seem a much better proposition compared with funding a large sum towards her higher education.

Since Meghna knows that she will need an education loan in the future, she should work on building a good relationship with her bank. She should ensure that she builds her deposits in one bank account and also have a clean record. She should avoid taking a credit card at this point of time and also not take personal loans. If she does take a loan, she should repay it on time and have a good credit record. Since the money that is not saved invariably ends up being spent, Meghna should begin a systematic investment plan that debits her account towards the chosen investment.

M’sian education sector set for next boom phase

M’sian education sector set for next boom phase
Posted on November 27, 2010, Saturday

KUALA LUMPUR: While the property sector now is in a flurry of consolidation through mergers and acquisitions, kicked off by UEM Land Bhd’s acquisition of Sunrise Bhd, followed swiftly by the just announced mergers of MRCB Bhd with IJM Land Bhd and Sunway Holdings Bhd with Sunway City Bhd, the education sector still remains ‘under the radar’.

MORE STUDENTS: The government is set to intensify its efforts to garner more students from the Middle East, China, Africa and other parts of South East Asia into Malaysia. - Photo from destination360.com
However, the fast growing private education business in Malaysia, which is currently valued to be worth some RM7.2 billion, seems to be stirring of late.

Ekuiti Nasional Bhd’s (EKUINAS) recent 51 per cent acquisition of APIIT/UCTI Education Group from Sapura Resources Bhd is seen as trailblazer for consolidation in the private education sector.

This is because of more outright acquisitions, mergers and the entry of fresh foreign players in time to come.

“There will be more mergers in the works as education entities that don’t merge may risk being left behind.

“There is urgency for smaller players to bulk up for scale and build up quality as the more renowned and established international players which have made their presence in Malaysia pose healthy competition to the growing market,” said Zakie Ahmad Shariff, chief executive of FA Securities Bhd and a former director of EduCity in Iskandar Malaysia.

This is more so as education has been identified as one of 12 National Key Economic Areas (NKEAs), with private education leading the

charge in catapulting Malaysia into the fastest growing education hub in South East Asia.

Malaysia has already become the 11th largest education exporting country with approximately 90,000 international students from more than 100 countries studying here in various international schools, colleges and universities.

Among the listed educational entities are Sapura Resources, SEG International Bhd, Help International Corp Bhd and Masterskill (M) Education Group Bhd.

Associate Professor Dr Rohaida Mohd Saat of the Faculty of Education, Universiti Malaya, lauded the move by EKUINAS and Sapura, saying, “the time has come for private colleges to merge, so as to gear themselves towards creating scale and meeting the increasing demands of foreign students flocking to Malaysia.”

Professor Dr Saifollah Abdullah from the Faculty of Applied Sciences at Universiti Technologi MARA said the Ekuinas Sapura pact was a perfect example of public-private partnership in the education sector.

The Education NKEA has been targeted to more than double the total gross national income to RM60.7 billion by 2020 from the current RM27.1 million.

Commenting on Malaysia’s attraction as an education destination, Dr Muhammad Azhar Zailani from the Faculty of Education, Universiti Malaya, said this is due to the competitive course fees, wide range of study options, many choices of universities and colleges and the existence of branch overseas university campuses.

“This allows students from different parts of the world to come to Malaysia, acquire prestigious qualifications from well-known universities from the West at an affordable price,” he said.

Aside from quality education, experts cite affordable living expenses, an economically sound and safe country and geographically safe environment as the main factors set to grow the education sector.

The government is set to intensify its efforts to garner more students from the Middle East, China, Africa and other parts of South East Asia into Malaysia.

To further build Malaysia’s participation in the global education sector, the government is also encouraging branch campuses of Malaysian educational institutes to go overseas.

Several Malaysian institutes of higher learning have branches overseas, including UCSI University and Limkokwing University in London.

Dr Muhammad Azhar said educational establishments must look towards merging with other established entities or be part of a larger educational network.

A notable example is INTI Educational Group that was acquired by Laureate International Universities from the United States.

With a presence in 21 countries globally, it has now become a leading educational establishment in the Malaysia as well.

Laureate said the reason why Malaysia was chosen as a preferred destination was its emphasis on infrastructure facilities and the government’s emphasis on developing Malaysia into an education hub.

In recent years, Kuala Lumpur, Petaling Jaya, Subang Jaya and Nilai have seen the mushrooming of many educational enclaves or precincts, attracting many foreign students in the process.

Malaysian educational players have also acquired smaller players and enlarged their base through listing their business as a way of tapping into greater capital resources as well as increasing student enrolment.

A case in point is HELP International Corporation Bhd and INTI Universal Holdings Bhd.

The listed holding companies of these educational establishments have strong collaboration with various overseas universities and attract many overseas students who want to acquire quality education at a reasonable cost.

Sapura Resources, which until recently held 100 per cent of APIT/UCTI Education, decided to divest 51 per cent of its stake to EKUINAS while holding the remaining 49 per cent along with management rights.

Now it appears both SAPURA and Ekuinas are in a better position to take advantage of the growth prospects of the fast-expanding education sector.

While some were quick to point out that Sapura was divesting from education, other observers argue that Sapura had in fact reinforced its commitment to the sector by getting a partner in order to grow its stake in the business. ­­— Bernama

Profile of University Graduates' Earnings

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