Doing the math: the rising cost of education in New Zealand

March 2, 2017

If you thought real estate was expensive – wait until you take a look at the potential cost of educating your children.

Having children costs you – physically, emotionally and of course financially; there are the shoes, the food, the karate lessons, the pocket money, the gadgets… but nothing drains the coffers like putting your child through school.

Paying for education is a financial commitment that can last up to 15 years, from preschool to the end of high school. According to the Australian Scholarships Group (ASG) 2017 Planning for Education Index, the average cost of full private education in New Zealand’s metropolitan areas for a child born in 2017 runs to almost $350,000.

ASG chief executive John Velegrinis says when you multiply that by the number of children in your family, you’re talking some serious money.

“If you have three children, the cost of educating them in New Zealand’s private education system could top more than $1 million,” Velegrinis says. “That’s significantly more than the purchase price of the average family home.”

Velegrinis says the cost of education in New Zealand has risen by 48 per cent in the past decade, double the rate of inflation over the same period.

According to the index, a 13-year private education across New Zealand could cost as much as $345,996 for a child born in 2017. That’s a jump of $112,318 compared to a child born in 2007 ($233,678).

A state integrated education has risen by 34 per cent over the same period to $109,354, and the cost of a state education has climbed 15 per cent in the past 10 years to $38,362.

The index, which is based on almost 2,000 parent responses, includes a range of costs such as school fees, transport, uniforms, computers, excursions and sporting trips to determine the overall costs of education.

The figures are average estimated costs and represent the highest amount parents and families could expect to pay.

Five ways to save for your kids’ education

Richard Ebbs, Mercer Financial Advice Leader, talks through some common approaches to preparing for the education bills to come.

Mortgage strategies

Many families with mortgages try to save through a mortgage offset account.

Pros: The balance in the offset account is deducted from the mortgage balance for interest calculations so the money in the offset account is effectively earning an interest rate equal to the mortgage interest rate.

You can withdraw money from the offset account to pay for other expenses, such as school fees, at any time.

Cons: This may be the most convenient route to dealing with the larger bills, but it is important to remember that each withdrawal comes at a cost, as these funds will be subject to interest.


Some families interested in highly reputed government schools move into designated catchment zones.

Pros: The comparison of fees between the government and private schools represents a notional saving but very careful budgeting and consideration of those other associated costs would be important.

Cons: This is a very costly option to take with large upfront costs to take into consideration through the buying and selling of the home and real estate agents fees. You can also expect housing in reputed school zones to come at a premium.

Savings and investment products

Consider investment products that offer flexibility and investment returns to match your risk appetite and timeframes. This will work well if you start saving as soon as your child is born.

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