child education

The real cost of private vs public schools

How much is putting your children through school really likely to cost you and are you prepared for it?

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How much is your child’s education really worth? Emotionally, it’s everything, financially – well, about 60% of the average pay packet for private schools and for government schools about 10%, says research data.

My daughter Grace starts kindergarten next year; Matilda isn’t far behind her. My wife and I are trying to work out where she goes to school.

As much as I would love to tell you that money has no impact on our decision, the reality is something different.

Australian Scholarships Group provides data every year on what it will cost you to send your children to public, systemic (e.g. Catholic) or Private School, and to be honest I am a little shocked.

The cost for primary and secondary education at a government school is an estimated total of $65,000, and the total cost for private schooling is $409,000.

The amounts include tuition fees and levies, including voluntary contributions, extracurricular activities, clothing, necessities, travel expenses and computer costs, including internet.

If we assume an average 25% tax rate, the amounts you need to earn are $87,000 to afford government education and $546,000 for private.

The average Australian earns approximately $78,000 before tax, or around $60,000 after tax.

Let’s assume both members of a couple work, and earn the average income, so the net take home pay is $120,000 per annum, which increases at 3% per annum.

While we’re on averages, let’s assume you have two children – it’s more like 1.4 children these days.

In addition to the tax cost, the annual increase in private school fees shows no sign of slowing down, averaging somewhere between 4.5% and 7% per annum – likely more than your income is able to grow.

When considering your child’s education, consider the following first:

  • Can we actually afford it – do we want to afford it?
  • Is the value obtained from private education worth the cost?
  • What else could we do with the money which may advance our children’s lives?
  • What should we be doing now to try and provide for this expense?

The above ignores the perceived, or real pressure from peers and the media to do what is best for your children.   I’m still not sure of the right answer.

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