By the time your kids start university, you will have shelled out for 13 years of combined primary and high school education plus childcare. It is a long and costly path. Most parents of young children are unlikely to have thought too much about navigating the costs of university. Besides, students can fund their own degree through the higher education loan program (HELP), which they start repaying when they get a job and their income reaches about $54,000 .
The tax office says it takes an average of nine years for kids to repay their HELP debt. Not surprisingly, some parents or grandparents with the means will step in so their kids don’t start their working life with a debt that reduces their ability to save and get a foothold in the property market. (Government incentives for early part or full repayment of HELP debt will end on December 31.?
You can expect it will take your kids even longer to repay their debt under proposals to deregulate fees for popular prestigious courses and to cut the income level for compulsory repayments. These were outlined in a report by the Education Minister, Simon Birmingham, titled Driving Innovation, Fairness and Excellence in Australian Higher Education.
Even without any policy changes, the cost of a university education will rise by up to 32% in the next decade, according to the ASG Planning for University Education Index. Under the current fees, the cost of an accounting, law, veterinary science and medicine degree in the first year will rise from $10,440 in 2016 to $13,801 in 2026, according to the index. Journalism, nursing, teaching and psychology degrees in the first year will rise by $2014 to $8270 in 2026.
What parents may underestimate is funding their kids’ living costs while at university, even if they work part time. Some 60% of students rely on their parents for financial support, which can stretch the family budget, says John Velegrinis, ASG’s chief executive.
Living costs, such as renting, will rise by up to 23% in the next decade for students living away from home. ASG estimates the living expenses for a three-year photography degree will be $102,580 by 2026, or about $20,000 more than they are now.
Students living at home will be up to $63,712 better off. For them, living expenses for the same three-year photography degree will be $38,868 by 2026.
When course costs and living expenses are combined, ASG estimates the cost of a four-year law degree will jump by $40,256 in the next decade to $195,909 in 2026, with a six-year medicine degree rising by $62,295 to $301,159.
Not surprisingly, 56% of university students say they are concerned or very concerned about being able to meet their current course and living expenses. “The cost of sending three children to university can place enormous strain on the family budget and could cost some families close to $1 million,” says Velegrinis.