• Bill Savellis

What To Expect When You're Expecting - Sydney Private School Fees

Author: Bill Savellis

It’s no secret that paying to send a child to private school is expensive. The Sydney Herald ran an article at the beginning of 2018 that detailed rising private school costs and explained what parents are doing to finance their kids' private education. The Herald included infographics from studies conducted in 2017 showing how 500 families financed their kid’s school tuition.

The breakdown looks like this:

Disposable Income—49%

Having a large amount of disposable income is the best-case scenario, obviously. About half of parents who send their children to private school fund it with little planning. To see how the other half make it, read on.

Savings & Investments—16%

This is the best way to maintain lifelong economic stability while funding private school for your children. Even financially successful couples dip into savings and investments to make payments. Parents who start planning early have the greatest ability to pay their children’s tuition.

Credit Card Debt—16%

It is unfortunate that 16% of parents go into debt while funding their child’s private education. Credit Card debt is typically the worst type of debt to have mainly due to the higher interest rates and the immediate impact is has on draining your cashflow. High levels of credit card debt are typically difficult to recover from.

Mortgage Redraw—9%

A mortgage redraw offers the lowest interest rates to help pay for private schools but the repayments are usually repaid over a 25 year term. If you calculated the total interest paid back to the bank over the 25 years, you end up paying more in interest then the amount you borrowed. That's like paying for your child’s education twice.

Extended Family—7%

In a rare circumstance, a well-off family member may be able to pay some or all your child’s tuition but, accepting such a gift generally changes the dynamics of the relationships. For this reason, many do not choose this option.

Personal Loan—2%

A small percentage of parents are able to get a personal loan to fund the cost of private school. Similar to credit card debt, it is difficult to recover from if you accumulate too much debt.

Creating a Plan that Budgets for Private School Fees

It’s common to feel emotional when you think about your finances. For some people, the topic is so uncomfortable that they avoid planning or setting financial goals altogether. If you’re one of the many parents in Australia who wants to send their child to private school, you may be feeling extra stress from the decision.

Creating a plan that budgets for private school fees will help to minimise this stress and avoid tough choices down the line (like going into credit card debt to keep your kids in school or struggling to get a personal loan that's large enough to cover the tuition).

Costs Continue to Rise

Private school costs have risen between 3—5% in the past year, and industry experts agree that the costs will continue to go up. Even if you’re confident that your income will undoubtedly cover your children’s tuition, remember that school fees increase over time. Your income won’t necessarily catch up at the same rate. Financial alanning plays a big role in successfully paying off private school fees.

Infocus Can Help

Sending your child to private school is a personal choice, just like deciding where to live, what job to do and what vacation you can afford. Like all important family choices, budgeting and planning give your family more options in the long run. Infocus is here to help you create a personal financial plan to meet all your family’s goals.

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