After the purchase of the family home, education of children is the next largest investment for many parents. 

Budgeting for the annual cost of Private School Fees can be a major burden for families, particularly when there are two or three children to put through school.  Secondary Private School education at many of the top tier schools will be around $20,000 per annum and fee must normally be paid in advance before each term or half year.

Budgeting for this extra cost, which equates to more than $1,660 per month, is not easy no matter what the family’s financial position.  It is no secret that many schools have large numbers of families seriously in arrears and this number keeps growing every year.  This is a major dilemma for schools, which don’t want to be chasing bad debts or removing students from their schools. 

The traditional mode of “pay as you go” for schools suits some families, but increasingly not many others.  Some schools offer a pay by the month system, but in the end the family still needs to find the full amount every year. 

Aware of this problem from personal experience and contact with several private schools, Michael McClure Managing Director of Buyer’s Choice Home Loan Advisory Service went about reinventing the way school fees are paid and created “Education Access”. 

Education Access is designed to assist families:

• That would like to send their child to a Private School but believe they can’t afford it
• That are coping with the cost of schools fees but are feeling growing financial strain on the family
• That are behind or struggling to meet the cost of schools fees when they are due

The concept is simple enough.  It involves the careful restructure of the family home mortgage to use untapped equity in the home or other property to release funds to pay the school upfront multiple years’ fees.  By paying in advance for up to 6 years schooling, Education Access specialists at Buyer’s Choice are able to negotiate with most schools for a modest discount on fees and/or a guarantee of “no more to pay” for the years prepaid.  Schools fees have typically increased each year between 3 to 8%.  They certainly haven’t ever decreased.

Restructuring the family mortgage to accommodate the school fees requires careful consideration and professional advice.  The aim of the exercise is to reduce the massive extra monthly, term or half yearly cash flow required.  By careful restructuring, Education Access can usually achieve a affordable monthly loan repayment to school fees loan that is substantially less than the “pay as you go” method with the school, enabling the family to manage their living expenses and education costs without hardship.

While the thought of paying interest on funds borrowed to pay school fees is unpalatable, the reality is that many families are paying credit card rates of interest on fees they paid by credit card and have not been able to clear.  The interest a family will paid on a restructured home loan will be at highly competitive home loan rates and partially offset by locking in today’s price for the forward years of education purchased.  Obviously not all families will be eligible for the Education Access. Those families with equity of 30% or more in their home (i.e. owe 70% or less of it’s value) will be in the best position to take advantage of the Education Access strategy. 

There are many aspects, considerations and benefits to be fully considered.  Every family will have unique circumstances that need to considered and assessed to establish eligibility and the best structure of teir Education Access solution.  Download a copy of the Education Access brochure for further details or call our office obligation free on 1800 888 876.