Education costs have increased by 81 percent over the past 15 years* and have outstripped wages growth and inflation over the same period, research by Lifeplan Funds Management has shown.
With the recent Federal Budget announcing initiatives that cast doubt of the long-term future of the Gonski education reforms, and changes that will increase the cost of university fees, saving for education expenses is more important than ever.
Matt Walsh, head of Lifeplan, said that for many years, education costs have been one of the fastest-rising components of the ‘basket’ of goods used to measure CPI.
“Since March 1999, education costs have outpaced CPI by 83 percent, and have outpaced wages by 19.5 percent.
“Furthermore, while wages growth has historically kept pace with education cost increases, over the last year education costs have risen faster than wages, which is a worrying trend and one that parents should be aware of when considering their children’s education.”
Mr Walsh said that parents will need to actively plan for their children’s schooling if they wish to have the funds available to pay for fees, additional tuition or extra-curricular activities.
“This is particularly true of parents considering a private school education for their children, as private schools tend to pass on the full increase in their own costs through fees. With the proposed changes in the Federal Budget to the way university students will pay for their education, it seems likely that university fees will see similar increases in coming years.
“But even parents relying on the public school system may be taken by surprise at the amount they will need to spend to ensure their children have the books and equipment they require.
“Providing for a child’s education is an increasingly expensive endeavour, and likely to become even more so in the future if the education cuts proposed in last month’s Federal Budget are passed,” Mr Walsh said.
“Australia’s public education system is likely to become more expensive for parents, who will need to foot the bill for more and more of their children’s school activities and requirements. As funding for schools becomes tighter, parents will be expected to provide the finances for sports uniforms or musical equipment, or even laptops or iPads that are now becoming standard items.
“Rather than try to pay for such things out of day-to-day cashflow, families should consider putting money aside even before their child starts school, so they have a fund to dip into to help cover future education expenses,” Mr Walsh said.
“A basic education savings plan doesn’t need to fully cover all the costs of a child’s education from kindergarten to university, but can simply be treated as a way to help ease the everyday burden of those costs as they arise.
“That way, paying for a school excursion or a computer doesn’t become an unexpected financial problem,” he said.
*Source: ABS March 2014
Lifeplan Funds Management is a specialist business of Australian Unity Investments.
It is a market leader in investment and funeral bonds, and a leading provider of education investment funds.
The Lifeplan Education Investment Fund Product Disclosure Statement (PDS) is available on the Australian Unity Investments website.
For more information please contact:
Matt Walsh, Head of Lifeplan
Phone: 08 8236 4706