The 2014 Budget contains worrying news for parents. University fees are tipped to increase significantly, particularly in popular courses like medicine, law and commerce.
Some commentators are tipping demand for private schools will drop off, as parents instead save for the university years. For example, on 24 July 2014 Bina Brown in the Financial Review said:
“For students and their parents, the numbers are chilling. A study by the National Centre for Social and Economic Modelling found the government’s proposed changes to university fees could triple the cost of some university degrees and double the time it will take to repay a HECS-HELP loan.
For many parents already facing the prospect of paying $450,000 a child for 13 years of private schooling before their kids even ask for help through the university years (not to mention any gap year funding), it might be time to reconsider how to cope with this double whammy to the household budget.” Read More…
Interestingly, there is strong evidence showing that public school alumni do better at university once they are there. It’s just that relatively fewer get there.
We are betting most doctors will not change their preference for private schools and will soldier on no matter what the cost. They know education is the best investment.
We have some clients paying more than $100,000 a year for their kids’ education. Four kids at private school means dad has to earn nearly $200,000 a year in pre-tax income just to cover these costs. They may be at a top private school, but they don’t know their dad: he works 12 hour days six days a week, and when he does get home he is exhausted.
It’s a real dilemma, and dad knows it.
For some it may be appropriate to re-consider the choice of schools as part of an overall long term intergenerational financial plan. Ideas include:
- low cost private schools, including Catholic schools and many of the new independent schools;
- using a private school as a “finishing school”, only enrolling in, say, year 10 or 11;
- external tutoring, focusing on exams;
- eligibility for scholarships (encourage that oboe from an early age);
- dedicate amounts saved on school fees to extra deductible super contributions (this is actually clear winner, mathematically speaking).
For all parents, and aspirant parents, the government’s plans for increased university fees raises the stakes and makes investing and sensible financial plans more important than ever.
The key to getting the most from our relationship is regular meetings. Come in, or phone up, and spend time with us telling us about what you are doing and what you want to be doing. It’s a rare meeting that does not kick at least one goal. Most meetings kick a few.
Meetings are the key to getting a sound and sensible financial plan in place. Please do not hesitate to contact Bez on firstname.lastname@example.org or Sean on email@example.com or 03 9583 6533 to arrange your next meeting.