Private school fees can overwhelm families, but proactive planning and open communication with schools can help manage the financial burden of providing a well-rounded education for children.
New research has revealed Melbourne is Australia’s second most expensive city for an Independent education, second only to Sydney.
The Futurity Investment Group Cost of Education Index, released in January, estimates an Independent education in Melbourne will cost $388,618 over 13-years for a child starting school in 2025, a jump of 20 per cent compared to last year.
The total cost of an Independent education in Melbourne is 11 per cent above the national average ($350,158) but below Sydney ($411,108).
The research also found the total cost of a Catholic education in Melbourne has increased two per cent in the past year to $198,291.
To cover the rising costs of private school fees in Australia, a new trend is emerging where affluent Baby Boomers are covering these costs for their grandchildren’s education. For many, an investment in their grandchildren’s education is an investment in their grandchildren’s future.
While no official data exists, anecdotal evidence suggests this trend is widespread, especially in Sydney, Melbourne, and Brisbane.
Associate Professor Andrew Grant in the Discipline of Finance at The University of Sydney Business School is familiar with this emerging trend. His main areas of expertise are behavioural finance and individual investor decision making.
He says there is a generational disconnect, with older generations like Baby Boomers and Gen X having more accumulated wealth compared to younger generations, who face rising housing costs, stubborn interest rates, and spiralling cost-of-living.
“The need for intergenerational transfer to afford private education, in addition to the cost of purchasing a home, is becoming more common in my opinion,” Mr Grant says.
He says grandparents are increasingly using their retirement savings and superannuation balances to help fund their grandchildren’s expensive private school education, rather than giving money directly to their grandchildren.
The financial stress of struggling to pay school fees can lead parents or guardians to make difficult trade-offs to keep their children enrolled.
“Many parents are prioritising their children’s education over other household expenses, even to the point of taking out loans or defaulting on other consumer credit to afford school fees,” Mr Grant says.
“There is also a perceived lack of ability for parents to negotiate school fees with institutions, even when facing temporary financial hardship. From the perspective of parents, it’s not just about their credit rating – it’s also about their personal reputation or that of their children and family within the school community, that can sometimes make that conversation with the school uneasy,” he says.
The rising costs of not only school fees, but also extracurricular activities and other education-related expenses, are creating significant financial pressure for families.
For parents considering a private school education for their children, the true cost extends well beyond the tuition fees.
The Futurity Investment Group Cost of Education Index calculated school fees ($11,062) will make up 62 per cent of the total cost of an Independent education for a child starting school in Melbourne in 2025, with the remainder spent on ancillary expenses including electronic devices ($1,356), musical instruments ($1,263), outside tuition and coaching ($940) and school excursions ($630).
The total cost of a Catholic education in Melbourne over 13-years for a child starting school this year is two per cent above the national average ($193,666) but more affordable than Canberra ($215,633) and Brisbane ($202,485).
School fees ($2,363) will make up 43 per cent of the total cost of a Catholic education for a child starting school in the Victorian capital in 2025, with the remainder spent on ancillary expenses including outside tuition and coaching ($1,234), electives ($618) and musical instruments ($373).
“A large part of the value in sending a child to a private school lies in the breadth and quality of their extracurricular offerings – from sports teams and music programs to specialised clubs and activities,” Mr Grant says.
“However, these extracurricular pursuits can quickly add up, with costs reaching into the tens of thousands of dollars per year.”
This financial pressure can lead parents to make difficult choices, but there are strategies parents can explore to help manage these costs, Mr Grant says.
“Parents need to be aware, when choosing a school, of the potential extracurricular costs especially if they happen to have an athletically or musically gifted child,” he says.
He suggests looking into fundraising options or scholarships. Additionally, many schools have their own fundraising initiatives that could provide financial relief for families.
“It’s worth applying for scholarships, even if you don’t necessarily meet every criteria. You may not get the scholarship, but you might get a bursary or some other form of temporary financial relief.”
The key, according to Mr Grant, is for parents to have open conversations with the school about their financial situation.
“Changes in financial circumstances are often beyond the parent’s control, whether it be due to health issues or a relationship breakdown for instance – circumstances that are not easily foreseen,” he says.
“Quite often the best advice is to get in contact with the school and explore possible alternative arrangements.”
With careful planning and a willingness to explore creative solutions, parents can ensure their children can fully participate in the rich extracurricular life of a private school education.
“It’s typically in the interests of the school to keep a student who is an excellent rugby player, or violinist, or potential A-list actor enrolled, because it often has longer term benefits for the school, in terms of reputation and alumni,” Mr Grant says.
“Ultimately, you need to weigh up whether it’s value for you, value for money, value for your child. Finding that sweet spot in terms of both the cost of education and affordability is an important conversation to have.”
Cost of education in regional and remote areas
The Cost of Education Index also calculated the total cost of education in regional and remote areas for a child starting school this year and found Victoria is one of Australia’s most affordable states for a non-metro Catholic education.
It is estimated the total cost of a Catholic education in regional and remote Victoria will be $151,423 over 13-years for a child starting school this year, a 13 per cent decrease compared to 2024.
The total cost of a Catholic education in non-metro Victoria is one per cent below the national average ($153,144), with school fees ($1,676) making up 38 per cent of the total cost, with the majority spent on ancillary expenses including outside tuition and coaching ($1,234), electronic devices ($701) and electives ($618).
The Cost of Education Index forecasts the total cost of an Independent education in regional and remote Victoria will be $247,714 over 13-years for a child starting school in 2025, a 13 per cent increase compared to last year.
The total cost of an Independent education in non-metro Victoria is one per cent above the national average ($244,075), with school fees ($4,437) making up 38 per cent of the total cost, with the remainder spent on ancillary expenses including outside tuition and coaching ($1,831), transport ($1,062) and electronic devices ($878).
