Saving for children's education - Australia

I met the chairman of a Friendly Society in Australia. They have 300,000 members. They make regular saving for the education of their child or grandchild.

The savings go into their personal account. The earnings from the investments go into a separate fund to pay for the university education of the students who made it to the university.

The parents or grandparents are happy with this arrangement. If their child or grandchild make it to university, the expenses are paid for under the "scholarship fund". If not, the earnings are used to help the child of another member.

The member can withdraw back the principal, if the child or grandchild does not go to university.

This is the first time that I have heard about the pooling of the investment returns to help the students who makde it to the university. This is the concept of a "friendly society".

A friendly society in Australia is similar to a cooperative society in Singapore. They work on similar principles, although the mode of operation may be different.