Nothing hurts parents more than receiving a huge bill during a time when things are financially tough, especially when it comes to your child’s education or general needs. With the guidance of financial expert Lacey Filipich, you won’t end up with a huge bill at the start of each quarter.
Parents choose to pay for private education are likely to relate to Waleed Aly’s 2015 commentary on fees:
“It’s like buying a new BMW every year … and knocking it off a cliff.”
If you have two kids with a fee of $ 30,000 + per year each plus uniforms and extra-curricular activities, Waleed has the right math for the high end of the private education market.
In return for their hard-earned cash, parents don’t expect a catastrophic BMW crash from a cliff dive. They choose the private school because they think it is a reasonable price for pay for their child’s education receives.
Whatever your motivation for sending your child to a fee-paying school, you may be familiar with the fear that comes with the imminent arrival of the bill each term. And once you’re in school, most parents would rather sell a kidney than tell little Johnny or Jane that they’ll switch to the local public option because you can’t afford it anymore.
Before you give up on internal organs, here are a few options to help relieve stress from tuition:
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Are you struggling to find the money for the huge tuition bill? Image: iStock.
Gradually save in a separate account
If you’ve done your annual numbers and know you can afford the fees, sometimes the stress is just not having any money set aside.
Avoid this money being used elsewhere by creating a separate bank account with no fees just for tuition. Automatically transfer the amount you know you’ll need to the account from your paycheck, either through payroll or using a direct bank transfer after you get paid.
For example, if you expect a $ 7,500 bill once per quarter, you transfer $ 2,500 each month starting three months before the first bill is due. Then, at the time of invoicing, the amount you need is waiting for you. It’s like creating your own progressive payment plan.
If you are already in the fee payment cycle and having trouble moving forward, you might …
Request a payment plan
Unlike public schools, each private school has the discretion to determine how and when fees should be paid, as well as their amount (which is why fees vary so widely from school to school).
Perhaps your school will be willing to let you pay smaller amounts more often. There has been more willingness to discuss payment options since the onset of COVID-19. Some schools have even been proactive in reducing tuition fees during this time of financial uncertainty.
Paying smaller amounts may cost you more overall, but if you don’t mind paying extra for the privilege, it can help you move on until you can save a quarter’s fee. in advance, then return to the standard payment method.
Saving that little extra to get going while paying for that term might seem like overkill. Because you might only need to do both for a few months, it’s worth considering short-term savings strategies to help you get there, like …
Delay or reduce spending elsewhere
We all have those months where everything comes to an end at the same time. In my house, it’s July, when home insurance, city rates, and car registration all have to pay.
If you are having trouble paying tuition due to an increase in other costs, you may consider changing your payment terms elsewhere. For example, can you pay your insurance premium monthly this year rather than annually? Can you choose a quarterly option for your tariff bill?
Again, it usually costs you more to pay monthly or quarterly instead of once a year. But if that temporarily eases the pressure on the tuition bill, it could be worth it.
Sending your children to school is not cheap. Image: iStock.
If you know you’ll be fighting to make ends meet, consider …
Payment in kind
Some private schools make a concerted effort to support the businesses of their students’ families using their paid services over the course of a year. One example I have seen is an event rental business. The school used the parents’ event rental company for chairs, tables, and marquees, offsetting the cost of the child’s participation.
If you have a business that provides a product or service that the school would otherwise have to pay for, you can offer in-kind payment to cover some or all of the costs.
Or you could …
Get an additional job
One of my school friends was the oldest of four girls, three of them in high school at a time. Both parents worked two jobs to pay the fees.
It’s not for everyone, and sometimes the extra income is offset by additional costs such as childcare. But even if it’s only for a few months, it might help you rest easier knowing that extra income will make the expense more achievable.
If that’s not an option, you can consider a last resort …
It only works if you pay off the debt before paying interest. This is not something to consider if you are unsure of your ability to pay later. Be realistic about whether you can do this, otherwise you could end up paying 20% more on compound rates, which is a quick way to get in trouble.
If you are sure that you have a stable income and can pay off the debt quickly, after you have used up your reserve fund and tried all of the above, you can choose to remove the plastic.
If you put the value of a term on a credit card and pay off that credit card before the interest-free period is over, you save yourself time. If you don’t pay off the card within the typical 55-day interest-free period, you may want to consider a balance transfer to a new card with a longer interest-free period if you qualify.
Think twice about external options
A quick Google search for “manage tuition fees” yields a range of education investment loans and funds.
Before opting for any of them, it is worth getting some independent advice. With double-digit education loan rates and relatively high management fees for funds, you would be hard pressed to justify choosing these options over non-educational branded alternatives.
If after all this you are still at the top of the cove without a paddle, remember:
Making it public is not the end of the world
Don’t judge yourself too harshly if you have to declare your defeat on tuition. In fact, it could be a better outcome for your family.
If not having to pay these fees means you can spend more time with your child instead of working, or you can spend the money elsewhere for wonderful educational experiences, maybe it’s worth it?
If a public high school can produce former Prime Minister John Howard, it can mean a world of opportunity for your child, too.
Lacey Filipich is the author of Money School: Become financially independent and take back your life. She is a financial educator, chemical engineer and TEDx speaker.
This article was originally published in April 2021 and was updated on June 8, 2021.