What is your education savings plan?

While education may look a bit different nowadays, there’s no denying Australians place enormous value on it.

Whether it be their own education or that of their children (or even grandchildren!), investing in education is one of the top goals of many of our clients, often ranking just behind buying or upgrading their home.

With so many education options on the table for young and old these days, knowing how much to set aside for education can be tricky. The best advice? Plan ahead and for all possibilities, if possible. You can check out my earlier articles about the importance of planning early for education costs here and there are some more general tips here. However, this topic is more important to us than ever. Why? Because, by 2025, Gen Alpha (made up of children born between 2010 – 2024) is tipped to be the largest generation in the history of the world – and these are the children of our clients.

How much do we need for school?

In the absence of having a certain school in mind, our clients are often guided by us on the estimated cost of future education, and the spectrum is broad.

Futurity Investment Group’s latest information is helpful when considering what you might be up for, if private school is your preferred choice. Recently, the Sydney Morning Herald also released some figures on the “35k” club – Victorian schools that cost north of $35,000 per annum and the below graphic gives a good overview of the choices available. Looking at the upper end of the scale can be daunting, which is why putting money aside sooner rather than later is a good choice.

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What about university?

At Rising Tide, we’re seeing a growing trend of parents considering public education for their children in primary and secondary school, so they can offer financial support for university or alternative higher education options.

Of the two billion Gen Alphas in the world in 2025, half of them will go on to study at university and, in Australia, the average HECS-HELP debt is $20,000 – $30,000. Keep in mind, though, that if your child is looking at a full-fee place, or staying at a residential college, costs can easily go over $30,000 a year!

I remember that incredible feeling when I cleared my HECS debt in my late twenties; it was like an instant pay rise and had a meaningful impact on my ability to invest and strive to reach other life goals. However, with a three-year degree and going straight into a corporate job, I’m in the minority.

Futurity Investment Group’s Impact of University Debt Report states 72% of respondents who attended university have a HECS-HELP debt in their thirties and 48% in their forties. It also shows that university debt affects women more than men, as they simultaneously graduate with higher HECS-HELP debt and then experience a gender pay gap throughout their careers.

What now?

If being able to provide the option of supporting your child’s education, or offering them direct financial support, is – or may be – a goal of yours, a good start is to discuss this with your partner and, possibly, your older children.

From there, as with any financial strategy or investment, it’s essential to do your research and get help if you need it.

But, most importantly, get moving, as time is your biggest asset.

And, as always, we’re here to help if you need guidance or support.

Rebecca Pritchard