Using Property Investment To Fund Your Child's Education

21-09-17 09:39 PM - Comment(s) - By Suze

Investing in property is one of the best ways in which we can achieve ‘passive income’. Passive Income refers to earnings that an individual can derive from an enterprise he or she is not materially involved in. Essentially, it is money earned regularly with little or no effort on the part of the person receiving it. By investing in property, we can direct funds earned here towards other tasks and responsibilities within our lives. Tasks such as funding your child’s education can prove difficult for many, but through the power of property investment, we have options. Let’s look at this contextually; Let’s say you’re looking to fund your child’s education, beginning with primary school, followed by high school, and finishing with funding of their university degree. Now depending on whether you choose to send your child to a private or public school, fees will vary quite drastically. Here are the key facts (Australian Good Schools Guide, 2017*): 

-  Parents in metropolitan areas can expect to pay approximately $4,455 per year for their child’s secondary schooling in a government school, around $12,599 in a Catholic school up to $22,450 if they choose the independent school route. Costs can rise significantly depending on school choice — some independent schools charge as much as $30,000 per year for tuition fees alone. 

-  Regional Australia provides more affordable schooling options, with secondary education totalling $3708 per year in the government sector and $9381 at Catholic schools. Independent school fees are still much higher than these alternatives, but are more affordable than in metropolitan areas, at around $16,973 per year — and again, some schools' fees may fluctuate.

 -  The total cost of private schooling from pre-school to Year 12 is nearing the half million dollar mark for a child born this year. There is also a staggering cost difference between the government and independent sectors, with expenses of $63,252 and $458,995 respectively. Catholic schools are a more affordable option at $228,942. Total costs drop in regional areas, at $51,656 in the government sector, $169,870 at Catholic schools and $323,006 at independent schools. 

Factoring in costs of uniforms, books, and extra-curricular activities, the cost of your child’s education can prove to be quite hefty; especially if you are choosing to go down the route of private schooling. As these fees are ongoing payments, paid on a yearly basis; parents will continue to fund their child’s education for a total of 13 years (Kindergarten-Year 12). One of our client’s daughters attends a Catholic high school in Sydney's eastern suburbs and pays $20K per annum including tuition, uniforms, excursions and extra-curricular activities. By the time her daughter graduates she will have paid over $100K. If we add to that University tuition, the cost of a child's education will continue. 

If a student decides to study a Bachelor of Journalism, for instance, average annual fees (as per the University Admissions Centre) for 2018 would be approx.. $6500. As the degree’s duration is 3 years, the total cost for this would add up to just shy of $20,000. Of course, there are additional costs, i.e. textbooks, student tutoring, post-graduate study, student exchange etc... The ongoing cost of educational fees for your child can prove to be difficult to manage for many. Some parents may no longer be working towards the end of their child’s schooling/ degree, and for many, the ongoing cost is simply too much. The nature of fees being ongoing and due annually; means that parents must ensure they are able to afford fees year-by-year. By investing in property, families are subject to clear a source of passive income, that will continue to grow and increase over time. The earning potential in property investment can allow parents the luxury of funding their child’s education, from Kindergarten, through to their university graduation. 

*Australian Good Schools Guide – by way of a survey conducted by the Australian Scholarships Group (ASG), Good Education Group, 2017).

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