Grandparents Funding Private School Fees: 7 Key Considerations

Are you a grandparent considering funding private school fees for your grandchild or grandchildren? Have a read of this article before you commit…

As most of us would be well aware, forking out for a private school education in Australia is generally expensive.

The lofty price tag creates a financial burden for many families—often leading to grandparents chipping in, funding private school fees for their grandkids.

Is this a path that you’re considering going down?

If so, hold tight before you hand over the cash.

There are several factors to consider, to ensure the financial implications don’t run deeper than your desired donation.

Grandparents Funding Private School Fees: What to Consider

Here’s a quick checklist of the key considerations for any grandparent considering funding private school fees:

1. Do the Maths

Make sure that you have accounted for all your living expenses, allowing you to live comfortably without the need to draw on any retirement savings in a way that is unsustainable. Specialist advice can help you in this area.

2. Plan Ahead

This will avoid the need to sell investments at a time that may not be optimal. It’s important to ensure that ample funds are accessible when you need them, including having an adequate buffer.

3. Consider the Impact on Asset Testing

If you are maintaining control of the funds set aside for fees, these will be considered as an asset by Centrelink and could impact any age pension entitlements.

4. Understand the Gifting Rule

If you are transferring funds to one of your children or grandchildren, be aware that Services Australia’s gifting rules currently allow for a gift up to $10,000 in one financial year and a maximum of $30,000 over five financial years without pension entitlements being affected.

5. Consider Taxation Implications

Seek advice on the best structure for investing any funds set aside for school fees. ‘Education savings’ products can be internally taxed at a corporate tax rate, which could be more than holding an investment directly.

6. Keep in Mind Estate Planning

If you do happen to pass away, therefore you are unable to manage any funds for education purposes, be sure that you have considered this in your estate planning.

7. Maintain Control

Ensuring you maintain control of funds until they are required means you keep the funds in any circumstance that you may not have prepared for, such as a child not attending private school or university.

Funding Private School Fees—Expert Advice

There is a lot to consider when it comes to funding private school fees for grandchildren.

If you have any questions or concerns about this topic, get in touch with the expert team at PrimeAdvisory.

Email us or give us a call on +61 02 9415 1511.

Let’s see what’s possible.