School Fees vs Buying a House

In Australia, accessing the best education for your children comes at a considerable cost. Unfortunately, this cost can be significant enough to force you to choose between sending your kids to a private school or buying a family home. So, is it possible to have the best of both worlds? This blog will unpack how you can purchase property while still being able to give your kids the best education possible.  

What costs are associated with sending kids to school in Australia? 

For Aussie parents, sending their kids to a good school is pivotal in ensuring they achieve a solid education. However, private or specialist schools have a much higher price tag than government schools. In 2024, it’s estimated that the cost of putting children through 13 years of schooling rose by six per cent to an average of $92,710 per child.  Sending children to Catholic schools will set parents back around $195,074, and independent education averages an eyewatering $316,944. This total accounted for more than school fees, including uniforms, camps, transport, sports equipment, electronic devices, relevant textbooks and stationery.  The table below shows rough estimates for 13 years of schooling by state.   Source: Futurity

How much money should I be saving for my child’s education?

How much money you’ll need to save depends on whether you send your kids to a private, specialist, or government school. Based on the above figures, you can expect to pay roughly $7,132, $15,006, or $24,380 per year for each child.  Like with any financial goal, breaking these costs down to smaller targets is a much more achievable way to save money. There are a few strategies you can put in place to save for your child's education. These include:

Savings accounts

Putting money aside in a separate savings account (even better if it’s a high-interest account) is a simple way to save money. Setting up direct debits to your account means you’ll automatically be adding money to your child’s school funding account. One thing to be wary of with savings accounts is that it’s often easy to withdraw funds, and can be tempting to pull from.  

Term deposits

If the temptation of a savings account is too much, a term deposit may be a better option. Term deposits let you invest funds for a set amount of time while receiving a fixed interest rate. They can be a good option as the more money you put in or the longer you invest, the higher the interest you’ll receive. 

Mortgage offset/redraw account

If you own property, saving as part of your mortgage offset or redrawing account is another option. Contributing additional funds to your mortgage each payment cycle is a fantastic way to help lower the interest you’re paying on your home loan while simultaneously setting aside money you could use for your child’s education. 

Managed funds/ETFs

Exchange-traded funds (ETFs) are investments available to buy and sell on an exchange like the Australian Stock Exchange (ASX). If you choose this investment strategy, you can access two types of ETFs: active and passive. Investing in a diversified portfolio can earn higher long-term returns from income and capital growth.  Sites like Vanguard, Betashares, and iShares are all fantastic examples of ETF funds that can be used as part of your investment strategy. 

Education bonds

Lastly, education bonds (through companies like Futurity) are an option for parents wanting a more specific way to save than general investment options. These funds offer the same benefits as traditional investments and saving options with the addition of some bonus features. 

Is it possible to buy a home and send my kids to a good school?

In short, the answer is yes. With thousands of schools around the country, it’s important to research what school will be suited to your child’s needs. Despite the expenses that come with education, ensuring you have a comprehensive saving strategy set up for both your child’s education and for a mortgage means you can achieve both.  There is also plenty of stigma surrounding state schools and the quality of education they provide compared to independent and other specialist schools. Again, research is crucial, as spending more money on education doesn’t always mean the education will be of a higher standard. If you’re on the fence about the type of school to send your child to, the ABC has a great resource that will help you consider all factors. Check it out here.  If you decide to send your kids to a government school, it’s important to consider school catchment areas when purchasing a property.  Ensuring that you receive financial planning advice as early as possible increases the possibility of being able to achieve both outcomes.

School catchment areas and property prices

School catchment areas refer to the location where a state school’s core intake of students must live. This zone can span multiple suburbs and may also not include a suburb in its entirety. For this reason, it’s important to check with your ideal school to see whether your future home will be in their catchment.  Domain’s annual School Zones Report confirms that across the nation’s combined capital cities, a high percentage of primary and secondary government school catchment zones not only show strong price growth but also outperform the growth of the suburbs they are located in.

How can the Inovayt team help me purchase property and give my children a good education?

You should never have to choose between one significant financial choice and another. The Inovayt team understands how important a quality education is as well as having the family home of your dreams. As every family situation is different, we take the time to understand your financial situation and the goals you’d like to achieve for your kids now and in the future.  If you’re torn between paying for education or purchasing a house, get in touch with our financial advisor team today.