We are seeing an escalating university/college fees year by year and I can't imagine the cost to be like in the next say 18-20 yrs from now. Thus, we need to explore the best solution to manage the situation at least to our next generation to come. It is not uncommon for us to see an established statutory retirement scheme such as Employees Provident Fund (EPF) in Malaysia. There are private and public retirement/pension fund setup by relevant parties mainly to ensure that the retirees/pensioners are well protected during their post-retirement period. By having such funds, the management costs are kept as low as possible and return may also be 'optimized' due to the huge available funds for investment activities.
Now, if we apply the same concept to the education plan which is also in dire need it would definitely benefits all relevant parties whether public or government. The entity to manage the fund can be a joint venture company with govt say holding 50%, private sectors mainly insurance/takaful companies say 30%, and the balance may be offered to key personnel in the company as a way of loyalty incentives. I foresee that this scheme will definitely be much cheaper than the available education insurance/takaful plan available in the market as we can scrap the 171% commissions structure from the pricing and keep the loadings as low as possible in view of law of large number. The modus operandi can be more or less similar to EPF and the Parliment may issue a law to impose a statutory requirement for all newborn babies to be enrolled in the scheme. Premiums/contributions may be a combination of parent (working), employer, and perhaps a token from the government as a way to reduce the burden of the parent. In the event of withdrawal due certain reasons such as the child fail to continue the study, the portions of employer and government will be returned. Thus, the parent will only receive his own contribution plus any investment profit, if any.
By this program, the government may reduce it's subsidy to the educational institutions in phases and ultimately this National Education Plan (NEP) will be able to sustain by itself. Perhaps, we may offer a 10% equity to the higher institutions (IPTA/IPTS) to ensure that the program is efficiently manage end to end. By being a shareholder in the entity, IPTA/IPTS should ensure that the cost of their fees are kept as low as possible in order to avoid 'deficit' in the funding.
A question may arise with respect to those unemployed parent. This is similar situation under the current retirement/pension schemes. Well, at least we solve bulk of the problem and the minority will be explored accordingly.
