Your kids’ education can be one of the best investments you ever make, but as private school fees continue to rise, is it still worth it?
For those who choose to enroll their children in non-government schools, years of tuition can easily run into staggering six-figure sums, according to one start-up.
“Certainly in the top tier schools… in Sydney and Melbourne, and increasingly Brisbane and Perth, that can be $35,000 a year just for tuition,” Edstart CEO Jack Stevens told Your Money Live.
“A lot of families we look after will be boarding as well which brings that to $60,000 a year per student,” he added.
Understandably, not everyone who wants this type of education can pay those kinds of school fees upfront.
That’s where Stevens’ business comes in.
“The main thing that we do is allow people to spread out an investment in schooling over a longer period of time, and that can mean up to five years after their kids finish school,” Stevens said.
The Australian start-up offers loans specially designed to pay for school education, allowing parents to make small regular payments instead of having to cough up a lump sum.
But what makes it any different from taking out a personal loan for example?
“What we do that basically no other product does is forecast really accurately what those fees are going to be and then build a package so… we pay each invoice as it arrives and parents just pay one consistent monthly, weekly [or] fortnightly amount all the way through,” Stevens said.
For a straightforward loan, parents pay a 3 per cent transaction fee and no interest, while on an extended plan (where parents can pay after the kids finish school) an interest rate of around 7.9 per cent or above is charged.
But it begs the question: is a school ever really worth $35,000 a year?
“It is a free market… all of those school have waiting lists and there’s no issue with demand for that level of education,” Stevens said.
“[But] the bulk of the market is lower fee schools and that’s where I think there is a reasonable trade-off between that price point and what you get back.”
Watch the full interview above.