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Financing your child’s private school tuition


Many parents saving for their child’s education do not know how much they will need to save or the directions their child’s future may take.

Providing a good education for your child is an investment. An Australian Scholarships Group survey revealed that private school education costs approximately half a million dollars. Private school fees are rising at ‘double the inflation’ rate.

There are options for parents looking to get help financing their child’s private school tuition.

You need help financing your child’s private school tuition, where do you start?

Payment plans

Edstart

This program allows parents to pay private school invoices on time by the term.

Minimum Loan amount: $2,001.00

Maximum Loan amount: No maximum limit

Service Fee: 3% of Facility Limit

Default Interest Rate: (charged when the facility is in arrears): 4%

Application Fee: $0

Dishonour Fee: $10

Repayment occurs: weekly, fortnightly or monthly

Edstart offers multiple payment plan options depending on the education costs and duration. It holds a credit licence issued by ASIC.

These may be use for any education-related costs including tuition fees, boarding expenses, uniforms, technology, and extracurricular activities.

All payment plans may be paid weekly, fortnight or monthly and apply at any time during the year. The customised payment plan options ensure parents do not borrow more than they need

Edstart does not require you to reapply for future years or pay any charges for changing or cancellation.

Edstart organises the payment before the due date after receiving the invoice.

Parents will then nominate a bank account, payment frequency and suitable start date.

Edstart Go

This payment plan is intended for ‘smaller education costs’, spreading payments for up to 12 months.

Features:

Edstart Pay

This payment plan is intended for ‘smaller education costs’ during the school year. Edstart pays your school every term.

Features:

Edstart Extend

The extended repayments are for up to 5 years after finishing school. Edstart will pay the school every term.

Interest is only charged on the balance of your Edstart account. The interest rate is personalised based on your credit profile. If you have a good credit history, you will be awarded a better interest rate.

Education Loans

Futurity Invest (formerly known as ‘Australian Scholarships Group (ASG)’)

Tuition Fee Loan

Futurity Invest provides a ‘tuition fee loan’ to cover the costs of private school fees for Australian students.

The tuition fee loan can also cover other education-related fees on the school’s invoice including levies, uniforms, textbooks, excursions or extra-curricular activities.

Parents can have a loan per school e.g. multiple children at one school would still be one loan.

Using the tuition fee loan parents can pay the invoices to schools online directly. Parents will need to make regular loan repayments to Futurity Invest over a 12 month period.

Futurity allows parents/carers to choose from two payment methods:

Tuition Instalment Loan

This program allows parents to pay private school invoices on time by the term.

Minimum Loan amount: $2,001.00

Maximum Loan amount: No maximum limit

Service Fee: 3% of Facility Limit

Default Interest Rate: (charged when the facility is in arrears): 4%

Application Fee: $0

Dishonour Fee: $10

Repayment occurs: weekly, fortnightly or monthly

Tuition in Advance Loan

This program allows parents to pay private school invoices annually in advance to obtain a school fee discount.

·         This loan can be used every year.

·         It is designed to pay for the whole school year upfront.

·         There are a variety of weekly, fortnightly or monthly repayment options to choose from.

Minimum Loan amount: $2,001.00

Maximum Loan amount: No maximum limit

Service Fee: 6% of the loan drawdown amount

Default Interest Rate: (charged when the facility is in arrears): 4%

Application Fee: $0

Dishonour Fee: $10

Repayment occurs: weekly, fortnightly or monthly

financing your child's private school tuition. private school education. private school library.

The loan is a consumer loan regulated by the Consumer Credit Code. Futurity’s loans are a continuing credit contract that parents can draw down on an ongoing basis, similar to a credit card.

Education bonds

Education bonds allow for parents to begin saving and investing in their child’s future education.

Benefits of Futurity Education Bond’s:

Flexibility

·         Full control and access to your funds at any time

·         Ability to make ‘Education Benefit Claims’ and withdrawals for any purpose

·         Investment options from Australian and International leading fund managers

·         Add or remove individual or multiple beneficiaries at any time

·         Add a bond guardian

Tax Benefits

·         Money paid into the education bond does not attract any tax if planned correctly

·         Futurity pays tax on the bond’s ongoing investment earnings at a rate of up to 30% on your behalf

·         For every withdrawal made to fund education Futurity will refund the tax paid by them (extra $30 earned for every $70 withdrawn)

·         No annual tax reporting required

Dedicated Savings

·         Allows you to make lump sum or monthly contributions to maximise the benefits of compounding within a low tax environment

·         Dedicated education fund helps you stay on track towards your goals

Education Savings Fund

Australian Unity

Australian Unity established an Education Savings Fund to assist parents, grandparents or guardians save for education costs.

“It’s never really too late to start saving for ANY purpose, and the same philosophy applies to an education savings fund, also known as an Education Bond.  Obviously the sooner you start, the greater the potential benefit as the power of compounding returns (interest on your interest, and growth on your growth) can contribute greatly to the end balance, not just the deposits that are made.”

Greg Bird, Head of Strategy and Distribution, Life & Super at Australian Unity

It is designed to provide parents with flexibility to adjust their investment, and earn a return on their investment.

Parents can also claim most expenses related to a child’s education including accommodation, travel and equipment.

Parents can choose a default balanced investment option or choose from a range of investment options to suit your personal objectives and financial circumstances.

Features:

·         The product is classified under Australian tax law as a ‘scholarship plan’ so parents can benefit from tax concessions where investment earnings pay for education related expenses

It operates as a ’scholarship plan’ under Australian Tax laws, which means that it is eligible for a special type of tax concession which is generally not available for other investment products.  A tax deduction available to the fund is effectively passed onto you when earnings are used to pay for education expenses.  Whilst your investment earnings remain within the fund, there are no fund related annual tax return obligations for you or your nominated student,

Greg Bird, Head of Strategy and Distribution, Life & Super at Australian Unity

·         The Fund covers primary and secondary education

·         Parents can change their contribution at any time or withdraw money that is no longer being used for educational purposes

There are no fee’s associated with changing contributions or making withdrawals. As with most forms of investment, for some investors there may be tax consequences if earnings are withdrawn, subject to how long the fund has been in place.

·         You can choose a default balanced investment option or choose from a range of investment options to suit your personal objectives and financial circumstances

·         Establishment Fee: Nil

·         Contribution Fee: Nil

·         Withdrawal Fee: Nil

·         Exit Fee: Nil

·         Management Costs: 0.70% administration fee per annum. Investment management costs range between 0.25% to 1.04% per annum.

 The Education Bond is simply another option for parents/carer’s to consider.  A loan ultimately needs to be paid back, and even with the current low interest rate environment interest rates won’t stay low forever.

Traditional term deposits and award saver type accounts, are definitely appropriate where there is a very short term funding horizon and the security and liquidity of the funds is of paramount importance.  But if the aim is to grow funds over the longer term to cover future education expenses, then it is highly likely that that traditional bank account style investments will struggle to keep pace with the increasing costs of education each year.

Greg Bird, Head of Strategy and Distribution, Life & Super at Australian Unity

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