Investing in Private Education, Is It Good or Bad For Your Kids
Every parent wants their child to have the best education possible and although a lot of countries in the world have very good public sector schools that they do not even have to consider schools but there are many countries in the world where parents are now starting to consider private schools over public ones. Australia has traditionally had a very robust public education system, the country has been repeatedly included among the best education systems in the world but lately, the standard seems to be decreasing.
Although the public sector education system is still good in Australia, surveys conducted in the last few years show that the competence level of Australian students is dropping. School funding remains the same but the standard seems to have dropped a little. By and large, the Australian public schooling system does not seem to have any major issues but the drop in competency level and a general improvement in the standard of living is making many parents consider private school education for their children.
So the question is, is private education worth the investment for your children?
Let us start off by looking at the cost differential between public and private schooling in Australia.
Public sector education is largely free in Australia. Roughly 60% of Australian children go to public schools that are well funded and well maintained. Parents do not have to pay for schooling fees but they do have to pay for uniforms, books and other necessities for their children.
Public sector schools have a voluntary contribution system where parents are encouraged to donate to the school but not compelled to do so. In any case, the cost of school supplies and other expenses can come around to AUD 1500 for a single year. In short, Australian parents will have to pay up almost AUD80,000 over the whole schooling period of their child over twelve years. This is the national average figure and cities like Sydney may have a slightly higher cost. As stated earlier this cost includes books, uniforms, computers and other necessities that are not provided by the public schools.
So with AUD as the baseline, we can now look at the cost of private education in Australia over the same 12 year period.
According to various surveys and reports, the cost of the private education system for the twelve-year period averages around AUD 450,000 in Australia. Once again in cities like Sydney, with a high cost of living, this figure can touch and cross the half a million-dollar mark.
So our first consideration was the cost and it is clear that private sector schooling in Australia costs almost 5-6 times more than public sector schooling. This creates questions of affordability. For many families, it is simply not possible to afford private education but even those who can do so, have things to consider.
Apart from the actual financial cost of private education, there are also opportunity costs that need to be considered.
– Time Horizon
Education does not end after the first twelve years. There is college and then university costs to consider. If the parents spend half a million on school education alone, then higher education will cost even more and unless the parents have the means, it will become very difficult for them to support the higher education cost for their children.
– Retirement Savings
Parents also need to consider other factors, such as retirement planning. It is not sensible to spend the savings on education without planning for the retirement nest. Both are perhaps equally important which is why parents have to make decisions based on opportunity cost.
So the first thing is that private education is only worth it if the family can easily afford it. There is no point in using all of the savings for the private education of your children and then having nothing in the retirement nest to bank on during old age.
If you can afford private education, then you can look at other perks that come with it. No doubt Australia has got one of the best education systems of the world but there is a general trend across the world that private schools tend to have a higher level of schooling and comprehensive education system as compared to public schools.
– Better Quality of Education
For starters, private schools can afford teachers with higher qualifications. A highly qualified teacher can make a lot of difference. Apart from this private schools offer networking, which seems to be one of the main perks. Children in private schools mostly have affluent backgrounds. They have parents with well-paying jobs and the better the private school is, the more “elite” will be the networking that your child will have.
This is something that public schools cannot offer. Children in private schools end up making connections that eventually help them out later in their life too. But is the networking worth paying half a million dollars for?
It is not just networking. Private schools prepare their students for college, so by going to a good private school your child will automatically have a better chance of getting placed into a good college and then into a good university, which will eventually lead to a good placement in the job market.
So it comes down to this. In a public school, your child will receive a decent education. The public school will prepare your child for college as well but there is no guarantee of getting into a top tier college or university. For this, your child will have to work hard. Private schools, on the other hand, provide a more comprehensive and exclusive education environment and they make access to top tier colleges and universities a little easier for their alumni.
With private school however a greater portion of your savings will go towards schooling. Whereas if you sent your child to a public school you could save almost AUD 400,000 over twelve years. Invest this amount and multiply it even more and set it aside for the higher education and other needs of your children.
So the decision is up to you. Yes, private education is worth it but only if you can easily support your child without compromising your retirement nest. If private education means that you will be at a full stretch on your savings then it is recommended to choose public education.
I personally think that the key to good education is strong family values. The most important thing in raising a child is a strong family unit. The parents should spend a lot of time with their children, encouraging them to read and to enjoy learning, and making sure that they attend school regularly. Education should be a priority in a child’s life, not a way of earning money.
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