Are you getting ready for private school fees?
Private school fees rising at 8-10pc a year, could hit $100,000 in a decade[1]
A recent article in the Australian Financial Review highlighted the continuing rise of private school fees over the past 10 years. Increasing well beyond the rate of inflation and forecast to double over the next 10 years, it is nothing short of alarming.
On average, private school fees increased by 7% for 2026 (versus the inflation rate of 3.4%). Some rose as high as 18%. At that rate the cost will double in 10yrs. It will not be unusual for a year’s tuition for one child to cost $100,000 a year, that’s pretax dollars. This is a sizeable sum, particularly if you have more than one child. This burden is increasingly being drawn from the “Bank of Mum and Dad” (aka grandparents). It is currently estimated that grandparents are paying 60-70% of private school fees[2] [3]. So, how do you plan for such a significant amount as a parent or a grandparent?
Assuming you have the funds available, you can pay the tuition upfront to avoid the fee increases and maybe get a small discount from the school. It can be a good way to reduce the stress of quarterly payments – out of sight out of mind. It can also create a sense of calm. Having made the considerable upfront investment, you can enjoy your child’s school journey, watch them reap the benefits of new networks and opportunities, and look forward to them taking on the adult world.
A more rewarding approach is to put the funds into an investment that pays quarterly distributions to match the scheduled tuition payments. The right investment should have the potential for capital growth, and even better if those distributions carry franking to ease any tax liabilities. This approach alleviates the dreaded cashflow issue of drawing down funds 4 times a year for 6+ years. You get to the end of your child’s schooling with more capital, a lower tax bill and an ongoing income stream for the foreseeable future.
This is where an Equity Income Fund with quarterly distributions could play a role.
The Atlas Australian Equity Income Fund has a current yield of 7% before attributing any franking.
On a $600,000 investment, the quarterly distribution would pay $10,500 – matching the per-term requirement for most private school fees currently. The long-term investment in the Atlas Australian Equity Income Fund offers capital growth and deliver quarterly income that should sustain, or even surpass, the ever-increasing tuition fees. A franking benefit reduces personal tax, and at the end of the school journey, a solid nest egg remains. Capital growth is forecast to be similar to that of the ASX200 equity market over the long term.
What does the Atlas Australian Equity Income Fund offer?
Regular Income – The fund currently pays a 7% distribution (before calculating any franking benefit) or 1.75% per quarter.
Smoother Returns – The fund implements a lower volatility strategy using the ASX-listed options market to increase yield, while providing downside protection.
Pass on earnings on to you – The fund invests in companies listed on the ASX that pay higher than market, regular dividends with franking attached.
Liquidity and Transparency – The fund offers daily pricing and daily liquidity.
If you’d like more information, contact your Financial Advisor and read the PDS on our website before investing.
1. www.afr.com/work-and-careers/education/elite-private-school-fees-to-hit-100-000-a-year-in-a-decade-20251119-p5ngra
2. It therefore comes as no surprise to hear wealth managers such as Jamie Nemtsas at Wattle Partners suggest that 70 per cent of clients are paying school fees for their grandchildren. 27 Feb 2025 The Australian
3. In 2018, another financial services company, Alpha Advisors, reported that 60% of private school students have their fees at least partly paid by their grandparents. The Sydney Morning Herald story last week also reported that a Melbourne wealth management firm said that 70% of its clients are paying school fees for their grandchildren. May 2024 SOS Australia
This information is for general informational and educational purposes only. It does not constitute financial, investment, tax, or legal advice. The content is not intended to be a substitute for professional advice. Reliance on any information provided is solely at your own risk. Past performance is not indicative of future results.
One Managed Investment Funds Limited (ACN 117 400 987) (AFSL 297042) (OMIFL) is the Responsible Entity of the Atlas Australian Equity Income Fund (Fund). The information contained in this document was not prepared by OMIFL but was prepared by other parties. While OMIFL has no reason to believe that the information is inaccurate, the truth or accuracy of the information contained in this document is not warranted or guaranteed by OMIFL. Anyone receiving this presentation must obtain and rely upon their own independent advice and enquiries. Investors should consider the Product Disclosure Statement (PDS), Additional Information Booklet (AIB) and Target Market Determination (TMD) issued by OMIFL before making any decision regarding the Fund. The PDS, AIB and TMD contains important information about investing in the Fund and it is important investors obtain and read a copy of the PDS, AIB and TMD before making a decision about whether to acquire, continue to hold or dispose of units in the Fund. You should also consult a licensed financial adviser before making an investment decision in relation to the Fund. Past performance is not indicative of future performance.