Who’s bankrolling Sydney’s private school fees? The bank of nan and pop

Retired grandmas and grandads are increasingly bankrolling the payment of private school fees as their offspring grapple with high interest rates, financial advisers say.

Schools fees are ratcheting upwards, meaning the cost of educating two children at some top private schools now exceeds $1 million.

St Joseph’s in Hunters Hill says more grandparents anecdotally were helping their offspring pay tuition fees.Credit: Nikki Short

Andy Darroch, from Independent Wealth Advice, said more retirees were chipping in for school fees because they were benefiting from strong returns, thanks to high interest rates on their savings and investments.

“Superannuation, particularly industry funds, have churned out extraordinary returns. It’s not uncommon for me to have discussions with clients who are retiring with more money than they thought,” he said.

“On the other side, you have the predominantly Gen X [parents] who have larger debts, more constrained cash flow and less spending power at a time when while school fees have increased at a rapid pace.”

A report by school financial services group EdStart released last month estimated 32 per cent of families were behind on their payments for school fees in the past year, but demand for private schools still remained strong.

The running costs for schools have also risen sharply, with inflation for the education sector as calculated by the ABS jumping 14.8 per cent between March 2022 and March 2024.

A spokesman for St Joseph’s College in Hunters Hill said it does not collect data on who was paying for fees, but he said “anecdotally, we have seen an increase in recent years in grandparents wishing to support their grandchildren through high school by providing financial assistance with school fees.”

Knox Grammar headmaster Scott James said some grandparents were also paying for incidentals such as excursions.

“Anecdotally, Knox has always had a number of grandparents paying fees, and that number is probably increasing with changes in how people invest,” he said.

Patricia Evans, from Manly, is one of the retirees who want to help their family financially, particularly with education costs.

Manly grandmother Patricia Evans said she wants to contribute to her grandchildren’s private school fees because she values education. Credit: Steven Siewert

She has two grandchildren currently under school age, but plans to contribute financially when they start school.

“I unfortunately had to leave school at the age of 14 for financial reasons. It was a sadness which I have carried all my life,” she said.

“I am a prolific reader, I have a lot of interests. What I have missed in formal education, I have made up for in a social context. So that’s why I have so focused on education. There was never any discussion about whether my two grandchildren would go to private school.”

Financial adviser Michael Radalj, who is based in Dee Why, said grandparents often had a decades-long attachment to the private school they attended.

“They’re following a pattern where they want to send their kids to the same school they went to,” he said.

“Once people have above $3 million, they get into their late 70s, they’re tired of travel and these portfolios, they just pump cash. Suddenly, there is all this money accumulating in their accounts.”

Jamie Nemtsas, from Wattle Partners, a wealth management firm based in Melbourne, estimates about 70 per cent of his clients are paying school fees for their grandchildren.

“In the initial interview with a client, school fees are always brought up,” he said.

Financial adviser Rebecca Pritchard said increasingly all retirees, not just the wealthy ones with a massive nest egg, were assisting with education fees and other costs.

“They’re saying I have got something and I would like to do something and I would like to help,” she said.

“Often these families have already given support for a house deposit or going guarantor. Part of it comes from uncertainty or nervousness.”

Census data shows families on lower incomes are increasingly likely to send their child to private and Catholic schools in NSW since 2012. However, middle income families are now more likely to stick with public schools compared to a decade ago. In 2012, 57 per cent of students from households earning $104,000 to $182,000 went to public schools, but a decade later in 2022 that had increased to 64 per cent.