How to fund your child’s education: savings and investment strategies

ARTICLE
28 September 2026 dot 4 mins read

By Michelle Liu, Senior Financial Planner

Many parents wonder how much it costs to educate a child and the best way to save for school or university expenses. Whether you're considering public, private or faith-based schooling, starting early can help reduce financial pressure and give your family more choice. In this guide, we explain education costs in Australia and explore savings and investment options that may help you prepare for future education expenses.
 
How much could your child's education cost?
 
A good education is one of the greatest gifts a parent (or grandparent) can provide for their child to give them a good start in life – and also one of the most expensive.
 
The Australian Scholarships Group (ASG) calculations show that sending a child born in 2017 to a state school from prep/kindy to Year 12 will cost an average of $68,613 and to a private school it is an average of $487,0931.
 
If you’re thinking, “But hang on, isn’t public school free?” - yes, the low tuition fees are voluntary, but there are other education-related expenses, such as: uniforms, textbooks, digital devices, stationery, excursions, music lessons, sports fees, and possibly tutoring.
 
It all adds up – so you need a plan for how you’re going to fund the education of your child(ren).
 
The key to managing the cost of education is to start early with research and planning. Kick off your planning by asking yourself the following questions: 
 
  • Do we want to send our children to a public, private or faith-based school? There’s a wide range of fees charged by all the different types of faith-based and private schools.
  • Are we prepared to pay for university costs such as textbooks and away from home accommodation?
  • Will we be paying for their university tuition fees or will they utilise the Higher Education Loan Program (HELP)? HELP is a low-interest rate government loan that covers university tuition fees and doesn’t have to be paid back until the student starts earning above an annual income threshold (for financial year 2026-27, the threshold is $69,528).

What are the best investment options for education savings?

After you’ve chosen a school/s and have an estimate of costs, including accounting for inflation, the next step is to look at how much you could set aside each month and where you are going to invest it.
 
Here are some suggested investment options to consider:
  1. Your home loan – use an offset account or make extra repayments and later redraw to pay the school expenses. This option offers the certainty of knowing how much your return is because it is based on your home loan interest rate. However, this option requires discipline to make the extra payments and not be tempted to use the savings for other things.

  2. Education bonds are essentially investment bonds with extra benefits and can be a tax-effective way to save for education expenses. When claiming education expenses from investment earnings, the education fund can obtain a 30% tax refund on the expenses being claimed. This produces a tax benefit which is passed on to the nominated student as part of the education claim and can be worth an additional $30 for every $70 of earnings withdrawn.

  3. Investment growth bonds offer a variety of investment options such as fixed interest, shares and property. If your marginal tax rate is above 30% and you can commit to a 10-year investment horizon, this is an effective investment vehicle because the bond is taxed at 30% and after 10 years earnings are returned to you “tax paid”.

  4. Managed funds or shares – if you have a long investment timeframe and prefer a bit more flexibility in how your money is invested and have the right risk profile, this might be an option for you. Earnings are usually taxed at the individual’s marginal tax rate so the ownership structure can make a difference when setting up the fund. This may be beneficial when investing under a non-working parent to take advantage of his/her tax-free threshold.
Features, fees and investment choices vary between providers, so it's important to compare options carefully.
 
When should you speak to a financial planner?
If you are considering investment bonds or managed funds, these products can be quite complex and have tax implications, so it’s a good idea to seek the help of a financial planner.
 
An AIA Financial Wellbeing Planner can crunch the numbers for you and help put you on track to meet your education savings goal. If you start planning when your children are young, you’ll buy yourself time to open up more choices for your family, your children’s education and their future.

Michelle Liu

Michelle is a Senior Financial Planner at AIA Financial Wellbeing. She works with Australian families to develop strategies for education funding, wealth accumulation and long-term financial wellbeing. As both a financial planner and parent, Michelle understands the challenges families face when balancing today’s expenses with future education goals.
 
Disclaimer:
Copyright © 2026 AIA Financial Services Pty Limited (ABN 68 008 540 252, AFSL 231109), trading as AIA Financial Wellbeing. All rights reserved. This information is current at the date of this publication and is subject to change. This provides general information only, without taking into account factors like the objectives, financial situation, needs or personal circumstances of any individual and is not intended to be financial, legal, tax, health, medical, nutritional or other advice. Before acting on the information in this publication, individuals should consider its appropriateness having regard to such factors.

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