Once the excitement of having their child being accepted to a private school dies down, parents often have to dig deep into their pocket to pay for school fees and other education expenses.
Make no mistake. Sending kids to private schools is an expensive endeavor, especially for working class families. Fortunately, there are ways of managing school fees. Here are some tips to help parents reduce education expenses at independent schools in Australia.
Use a School Budget Planner
This is separate from the usual household budget planner. But it serves the function of keeping track of school fees and related costs so that parents can plan how much they need to spend for their kids’ education expenses. Jot down school fees, uniforms for different seasons, textbooks, stationery, computer and Internet requirements, transport costs and after school care charges. Work out how much the family should put aside for their child’s school fees.
Send Children to a State Primary School first
Many parents also use the strategy of enrolling their children in state primary schools first before sending them to private secondary schools. Save and invest wisely during the six years a child is in primary school. In the meantime, put the child’s name on the waiting list of a preferred independent secondary school. Do note being on the waiting list costs hundred of dollars with no guarantee that the child will eventually be accepted.
Make Use of Early Payment Discounts
Parents can also reduce education expenses at private schools by making use of early payment discounts offered by many schools. The discount can range between 5% and 10% of annual school fees. That’s quite a substantial amount when it’s taken off tens of thousands of dollars.
Some schools also allow parents the option of prepaying school fees up to a certain number of years in advance. If the family has sufficient fund, this will bring down the costs of private school education considerably.
Ask About Repayment Plans
Most working class families will not be able to make a single lump sum payment. Instead, they often have to split the payments into several installments. So do ask about repayment plans available at the school. Fortnightly, monthly or quarterly repayments may be more suitable for some families.
Ask About Sibling Discounts
Parents planning to send more than one child to a private school should also take advantage of sibling discounts that some schools offer.
While it’s true that private school education is costly, there are ways to cut down school fees. Australian parents can reduce their kids’ education expenses by using a school budget planner to keep track of costs, sending their kids to public primary schools first, using early payment discounts, split payments into several installments instead of paying one lump sum and enquiring about sibling discounts.
Saving for Children’s Education
According to the May 2007 Education and Work Survey conducted by the Australian Bureau of Statistics, unemployment rates declined with increasing levels of education. This shows education is key to financial security for young people.
However, meeting the rising costs of education is a huge responsibility for many parents, hence the importance of saving for children’s education. Here are some strategies to help Australian parents start their kids’ school funds.
Start Saving Early for Children
It typically takes five or six years before a child begins her early education. So parents do have quite a long time frame to start saving. Ideally, do this before the child is even born. A cash savings of only $20 a week invested into a high interest savings account can help the parents save more than $1000 within a year. If the amount is reinvested year after year, it will grow into a sizable sum in 10 years. Make sure this fund is only for the child’s education and avoid using for other household or personal expenses.
Open a Child’s Account in a Parent’s Name
Punitive tax rates – 46.5% when the interest income exceeds $420 per year – are applied to investment income earned by children. So avoid investing in the child’s name. Instead, invest in the name of the parent with no or lower income. In fact, a non-working spouse could earn an annual income, including investment income, of $14,000 before paying income tax.
Invest in Managed Funds or Trusts
As it take years before a child steps into school, long-term investments like managed funds or trusts are extremely useful to save for children’s education. These investments are professionally managed by experienced fund managers and offer the opportunity to buy a diverse range of listed Australian and International shares. Start with a capital of $1000 and make a commitment to contribute $50 to $100 a month and the returns will snowball over the years.
Use School Savings Plans
In Australian, many leading banks and fund specialists like the Australian Scholarship Group (ASG) and Lifeplan also offer school or education saving plans for children. These plans are often tax-effective as the Australian government encourages parents to save for their children’s education. However, proceeds from such plans are only meant for children’s education and cannot be accessed earlier. Those who withdraw funds before they are due often face a penalty.
Good education often equates better job prospects and salary packages. That’s why parents are willing to spend on children’s education. However, they need to start saving for it early and invest it wisely in a parent’s name. They can also invest in managed funds or trusts and use school savings plans to start their kids’ school funds.
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