October 11, 2016 Private or public education? The age-old question
Private or public education? Deciding where to send your kids to school is a tough one.
If you have a young family and want to send them to a private school, you’d be forgiven for losing the odd night’s sleep.
To be honest, my wife and I are on the fence.
I went to a co-ed public school; my wife, a Catholic girls’ school.
Like any parent, we want to give our two girls the best education possible and more opportunities in life.
Once you do the maths, though, going private is a lot of money, particularly if you have more than one child. So much so, it’s hard not to feel a tad anxious about it at times.
First, let’s do a quick comparison, from prep through to Year 12.
Private is a whopping $500K, give or take. Yep, that’s right – per child. I know, crazy.
Public, on the other hand? We’re looking at around $70K per child. Enough change to put a very healthy deposit down on an investment property or two, right?!
I’ll be blunt: we’re not going to spend up to $1M to go private all the way through.
For primary school, we’re leaning towards the public system.
The reason being is that, luckily, we have a fantastic school right on our doorstep. Like, exceptionally good. And that’s going by our own research and word-of-mouth through friends and friends of friends.
While secondary school’s a while away, which buys us time to make a concrete decision, we’ll likely go private.
The upshot is we’re banking on around $300K per child – all in. Sure, it’s still well shy of the million-dollar mark, but it’s a substantial amount of extra money we’ll need to make up over the next 10 years or so.
Whichever way you look at it, $600K is a huge amount of money.
All things considered, as a young family, you need a strategy. And to get cracking as early as possible.
Here’s a few we’re currently considering…
Save and invest
This means putting away a set amount each week and slowly investing in managed and indexed funds that are linked to the sharemarket.
The trick here is consistency.
This involves buying one to two properties and, down the track, borrowing against these to cover the education costs.
These are effectively invested through managed funds.
That said, before purchasing, it’s important to get your head around the tax advantages and how they can be used for education, as there are some specific rules around these.
Earn more money
Easier said than done, right?!
Well, while my wife’s taking a career break at the moment to look after our family, our family income will eventually go up once she returns to work.
Pay more off your mortgage
By way of a redraw facility, this would allow us to borrow the money back before the girls start Year 7, which would obviously be very handy.
Buy in the zone
Now, you could buy property in the area of a good school such Canterbury Girls Secondary College, for example.
The main issue here is that the market is so strong in that zone, with median house prices sitting well over $2M.
For me, there’s no clear winner at this stage.
The important thing for us is that we now know what the playing field is, which helps to minimise the anxiety around which way to go. In other words: we’re now in a position to make an educated decision.
What am I leaning towards? Well, I’m working on a combination of a number of strategies.
Firstly, I really like investing in property. And for good reason – we’re talking tax benefits, capital growth and stability.
Secondly, my wife eventually returning to work will mean her salary will go a way towards covering the education cost.
Thirdly, we can even redraw the money required for a number of years and then sell down the investment properties after they finish Year 12 to pay it back.
All that said, every family’s circumstances are different.
What works for us, mightn’t work for you.
The key is to start planning ASAP, which, if you’re ever up for a coffee, I’m more than happy to start talking you through!
Disclaimer: all information contained within this article is of a general nature. It does not take into consideration your personal financial circumstances. Please consult a professional financial adviser (just like us ???? ) when making a financial decision.