Saving for your child’s education: all the costs explained

Whether you plan on sending your kids to an independent, religious or public school, it pays to consider the costs ahead of time.

Every parent wants the best possible education for their kids, but there’s a huge difference in cost between sending your kids to a government, religious or independent school.

Understanding what each option costs is the first step in making the right choice for you. It’s a good idea to think through your schooling options right from birth, especially if you need to save up for a private school education, as it will help you to work out how much you need to set aside. Let’s explore what it costs to send your kids to different types of schools, as well as some options to save up for or invest in their education.


Planning for childcare expenses

“There are a number of childcare choices. Working out what is best for you and your family is key,” says Jonathan McCullagh, Senior Financial Adviser. There are four major options:
  1. childcare centres - these cost between $70 and $180 a day
  2. family day care - this can cost between $6 and $17 per hour
  3. nannies - expect to pay between $15 and $35 per hour
  4. Au pairs - you provide a room in your home and cover most living expenses, plus provide a wage of between $170 and $250 per week
There are government rebates available for families who send their children to registered providers, which are generally childcare centres and family day-care providers. These rebates are means-tested based on the family income and start at 85 percent for families that have an income of up to $69,390; the Services Australia website provides more detail on the rebate for each income bracket.

Planning for public school expenses

There are no tuition fees for Australian public schools, but there are a number of auxiliary costs you may need to cover for items such as uniforms, devices, excursions, camps, transport, sports apparel, music instruments, extra tuition and parent contributions.
“Planning for these costs is key. Many parents benefit from saving a small amount of money on a weekly, fortnightly or monthly basis to ensure that there are funds available when some of these expenses are due during the year,” says Jonathan.


Planning for private or Catholic school expenses

Some parents choose to educate their children in the private or Catholic school system. 

While tuition fees make up the bulk of these costs, there’s a number of other expenses to consider including uniforms, books, excursions and more. 

Current estimated costs for private and independent schools:


Primary school

Secondary school

Tuition fees

$9,664  $19,556
 Uniform  $327
 Devices  $323  $1,172
 Excursions  $221  $508
 Camps  $197  $500
 Transport  $688  $562
 Sports apparel  $282  $369
 Music instruments  $453  $306
 Extra tuition  $670  $657
 Total  $12,825  $24,105


Current estimated costs for Catholic schools:


Primary school

Secondary school

 Tuition fees  $9,664 $19,556 
 Uniform  $327
 Devices   $323 $1,172
 Excursions  $221 $508
 Camps  $197 $500
 Transport  $688 $562
 Sports apparel  $282 $369
 Music instruments  $453 $306
 Extra tuition $670 $657
 Total  $12,825 $24,105


It’s worth noting there can be a variance in costs between regional and metro locations. The most expensive option is to send kids to an independent school in a metropolitan area, while the least expensive option is a government school in a regional area.


Saving for your kids’ education


When you have decided which education option is right for you and your kids, you then need to decide on ways to save up so you have enough money to support your choice.


In the short-term, put together a budget so you can work out how much you have left after you meet your everyday expenses to put aside for your kids’ education. These can be stashed in a high-interest savings account or term deposit, so you’re continuing to add to your funds while you save.


Longer term, there are a number of options to build an education fund, which can be used independently or in combination. Let’s take a look at how they work.


Investment or education bonds

Bonds are investments that allow you to lend money to a company or government with the purpose of receiving a regular and predictable rate of return. They typically require you to regularly invest a certain amount in the bond.


Bonds are tax-effective, meaning you are usually only charged a 30 percent flat tax rate when you take the money out. But you must hold the investment for at least 10 years and you can’t add more than 125 percent of the previous year’s investment to the bond.


It’s worth noting that investment bonds can be used for any purpose you wish, while education bonds must be used for education only.


Managed investments or exchange traded funds (ETF)

A managed investment is, as the name implies, a managed fund where your money is combined with that of other investors; a professional investment manager then invests on your behalf. ETFs are also managed funds, but are traded on an exchange, such as the Australian Stock Exchange. 

Managed funds are more flexible than education bonds, and the return doesn’t have to be used for educational purposes if you change your mind. They are taxed at the individual’s marginal tax rate, however, unlike investment or educational bonds.

There are a wide variety of managed funds to choose from, each with their own level of risk, investing approach and returns. Consider talking to a licenced financial adviser if this is a path that interests you – they’ll be able to help you develop an investment strategy that meets your needs and risk appetite.

Extra home loan repayments
Another option for saving for your kids’ education is to make extra repayments into your home loan. With this approach, your “return” is the money you’ve saved on your interest rate – which then gives you a known rate of return. 


However, in a low-interest-rate environment, the real return may be less than inflation over time, which means you may have additional costs by the time your kids are ready to go to school. You also need to be disciplined to not spend the money.


There are plenty of ways to save for your kids’ education – but you need to sit down and work out how much you need to set aside, and then be disciplined about making sure you stick to your plan. By doing so, you’ll take the stress out of affording your kids’ education. 

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