The price of education
The cost of educating children keeps rising, but there are ways to ensure you can give them everything – and maintain your current lifestyle too!
As a parent or grandparent, we all want to give our children (or grand children) the best start in life, so creating a financial plan for their education now could be the ultimate gift – paving the way for their future success.
Worryingly, for years the rising cost of education has significantly outpaced general inflation. The past financial year was typical: the overall consumer price index rose a tad over 3 per cent in the past financial year, but education inflation jumped nearly 6 per cent.
This means that educating a child in Kindergarten today, through to Year 12 could cost between $95,000 and $125,000 in total. This can be quite a financial pressure, especially as many Australian families put an average of more than two children through school.
If you plan to send your child to one of the more expensive private secondary schools, then you could expect to pay $20,000-plus a year. And this is before extras such as enrolment fees, building levies, textbooks, uniforms, music lessons, sport camps and excursions. That’s more than $100 for each child’s school day!
Even free public education can run into thousands of dollars over 13 years of schooling.
And, of course, with a degree becoming increasingly necessary, many Australian parents are feeling the added pressure of helping their children get into the best university or college course for their careers – which can add another $20,000-plus to the total cost of a child’s education.
It’s no wonder that, according to the 2008 AMP.NATSEM Income and Wealth Report into tertiary education, a third of university students live with and are dependent on their parents to fund their course. But the good news is, there are many ways to meet the costs of your child’s education.
One possible solution to the question of how to fund your children’s education could be to invest in a Child Advancement option available with some insurance bonds, like the AMP Growth Bond. These types of longer-term investments can be used to invest in an education fund on behalf of a child under the age of 16. This allows for the automatic transfer of ownership of the investment to the child on their reaching the nominated age between 10-25 years. The child does not have to pay tax, stamp duty, or fees and charges as a result of the transfer, subject to certain conditions being met, including a minimum investment period. There may be tax implications if the bond is cashed in before the minimum investment term expires.
Of course, everyone’s circumstances are different. So before you make any decision, please call us to find out how you can best invest in your child’s future.
What you need to know
Information current as at November 2010. This article contains general information only. It does not take into account your objectives, financial situation or needs. Please consider the appropriateness of the information in light of your personal circumstances. it is important you consider these matters and read the current Product Disclosure Statement for the AMP Growth Bond, issued by AMP Life Limited (ABN 079 300 379, AFSL 233671), available from AMP or your financial planner. If you decide to purchase or vary a financial product, your financial planner, our practice, AMP Financial Planning and other companies within the AMP Group will receive fees and other benefits, which will be a percentage of the premium you pay and/or the advice fee you agree with us. Further details are available from your planner or AMP Financial Planning Pty Limited, telephone 1300 157 173.
