Education savings provider Australian Scholarships Group (ASG) is ramping up its marketing efforts to attract new customers.
Join more than 100,000 members today and you’ll get:
ASG has been operating in Australia since 1974 and in New Zealand since 1990. There are currently around 22,500 Kiwi children enrolled in the scheme and over 146,000 across the Tasman. At June 2013, the company had over AUD 1.6 billion under management.
ASG’s education funds are promoted to families to help meet the mounting costs of tertiary study. But if your child doesn’t go on to tertiary study, there’s no return on your savings.
Commission-based sales agents promote ASG programmes here. Families who sign-up to its flagship education fund are required to make regular contributions, which increase by 8 percent a year. For a child under 1, ASG states the minimum weekly payment is $10 with contributions payable until the child turns 13.
Earnings on contributions are pooled and paid as a scholarship benefit if your child goes on to tertiary study. Any payout depends on ASG’s investment earnings and also on the number of children applying for a scholarship in any particular year. For a child enrolled before their first birthday, ASG projects a gross return of 6.6 percent a year and a scholarship payment of $2919 for each year of a 3-year tertiary course.
But they’ll only be eligible for a full scholarship if they choose a full-time, 3-year tertiary course and successfully complete each year.
If your child doesn’t pursue tertiary study or opts for a course that doesn’t meet ASG’s criteria, you’ll only get back your contributions less ASG’s administration and management fees. It’s estimated that on average only half of those enrolled go on to apply for a scholarship.
With tertiary education costs increasing (see our graph, right), a dedicated savings fund may look attractive. ASG points to the motivational materials it provides for encouraging further education and the fact your money is essentially locked away as strengths of its fund.
However, you’re taking a gamble that your daughter or son will choose a tertiary course that meets ASG’s criteria – and stick with the course. If you lose the bet, there’s no return on your investment.
In 2004, ASG signed an enforceable undertaking with the Australian Securities and Investments Commission following complaints that some ASG representatives had made false statements about its funds. These included statements that annual contributions wouldn’t increase, 100 percent of contributions were refunded to members exiting before the maturity date, and that ASG was government backed.
Representatives were also accused of pressuring prospective members into joining the funds and not giving them sufficient time to read the disclosure document and consider the suitability of the product.
ASG undertook not to use or permit the use of the statements, or permit its representatives to engage in deceptive conduct. The company also issued a corrective statement to all Australian members who joined before 1 January 2004.
Report by Jessica Wilson.
This information is available to Consumer members only.