Written

For

The

Australian

-

School

fees

keep

rising

and

the

choice

gets

harder

for

mum

and

dad

Would you pay off a $950,000 mortgage or send one child to an elite private school? Turns out, the monthly cost is roughly the same.

Private school fees have jumped almost 6 per cent in the past year, well ahead of inflation. In Sydney and Melbourne, the top-tier schools now charge north of $50,000 a year — and if your child boards, you're easily looking at $80,000 before extras. Remember, these are after-tax dollars. A parent on the top marginal rate needs to earn close to double that just to write the cheque.

So how do families actually afford it? Most don't, at least not without sacrifice — saved for years, skipped holidays, inheritance, or a helping hand from the grandparents.

For grandparents wanting to chip in, paying the school directly is the simplest route. For lump sums earmarked for the future, the options widen: park it in a high-interest account at 5.5 per cent, throw it in the offset and save 6.5 per cent, or build a share and ETF portfolio in the lower-earning spouse's name aiming for around 10 per cent — though market timing risk applies if you need the money within seven years.

Investment bonds get plenty of airtime for their 30 per cent tax rate after 10 years, but honestly, if one spouse earns under $135,000, you're usually better off investing directly in their name. Scholarship plans are a lesser-known cousin — effectively zero tax if withdrawals fund education — but they're hamstrung by the $416 minor's tax-free threshold, making them far better suited to university costs than school fees.

My own approach? I bought in a catchment with top-performing public primary and high schools. The house cost more, but I'm well ahead of $30,000 per child, per year. Plenty of non-selective government schools outperform their private rivals academically.

It's horses for courses. There's no right answer — just what you can sustain and what you value.