There are many potential uncertainties when it comes to private education. Parents will typically spend hours discussing whether this is the right option for their children and, if so, which schools to consider. One thing that is not uncertain, however, are the significant private school fees payable, so it pays for parents to have a clear strategy in place to fund these costs while pursuing other vitally important financial goals.
According to the Australian Scholarships Group (ASG) Planning for Education Index released in January 2018, the cost of privately educating a child born in 2018 could approach almost $500,000.
It believes it could cost a whopping $475,342 to educate one child through the private system, and its estimates have soared 61 per cent in the last 10 years.
The index calculates the cost of private, faith-based and public education and believes prices will skyrocket further.
It estimates the full cost of primary and secondary education for a child born in 2018 could cost $66,320 in the public system, while faith-based education was estimated to cost $240,679 per child.
The figures include the cost of school fees as well as an estimate for extra-curricular activities, computers, travel expenses, uniforms, school excursions and camps.
They are in line with a rise in education spending recorded in the Australian Bureau of Statistics’ Household Expenditure Survey released last year, which found costs rose by up to 44 per cent in the six years between 2009-10 and 2015-16. Most of this increase came from extra spending on school fees.
For its forecast, the index surveyed 13,500 parents and estimated it would cost about $54,940 for non-fee education costs at private schools in metropolitan areas.
This cost dropped to about $47,950 in faith-based schools and $43,442 in government schools.
Overall private education costs were expected to see the highest increase, with estimates rising by a staggering 61 per cent or $180,128 in the last decade.
This figure dwarfs the 34 per cent rise in wage growth in the same period.
What this means is that education costs are demanding a far greater share of the family wallet than in the past, placing more burden on the average family, already challenged by the rising cost of living.
Strategies to help fund Private School Fees
Whilst these fee estimates may seem confronting and somewhat insurmountable, in our experience there are many potential strategies that can be implemented to ensure these fees can be funded without parents having to sacrifice the other important elements of their life.
Of course, there is no one strategy that suits all and there are many factors that need to be taken into account in determining the optimum funding approach for each family. Here are a few steps and strategies to consider based on our experience over many years in helping parents and grandparents with this funding challenge.
Funding education is a problem that all parents eventually have to confront. In our experience, with the right long term strategy in place it doesn’t need to be as difficult as it all may seem today.
This advice may not be suitable to you because it contains general advice that has not been tailored to your personal circumstances. Please seek personal financial and tax/or legal advice prior to acting on this information. Before acquiring a financial product a person should obtain a Product Disclosure Statement (PDS) relating to that product and consider the contents of the PDS before making a decision about whether to acquire the product. The material contained in this document is based on information received in good faith from sources within the market, and on our understanding of legislation and Government press releases at the date of publication, which are believed to be reliable and accurate. Opinions constitute our judgment at the time of issue and are subject to change. Neither, the Licensee or any of the Oreana Group of companies, nor their employees or directors give any warranty of accuracy, nor accept any responsibility for errors or omissions in this document. Gordon Thoms and David Conte of Calibre Private Wealth Advisers are Authorised Representatives of Oreana Financial Services Limited ABN 91 607 515 122, an Australian Financial Services Licensee, Registered office at Level 7, 484 St Kilda Road, Melbourne, VIC 3004. This site is designed for Australian residents only. Nothing on this website is an offer or a solicitation of an offer to acquire any products or services, by any person or entity outside of Australia.