Education Savings Accounts
Comparing with Savvy to find the best education savings account is as easy as ABC. Learn how by reading our in-depth guide.
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Saving for your child’s education can provide them with the best start in life. It can expand their knowledge, develop skills and set them on a pathway towards a successful career later in life.
Comparing with Savvy takes the homework out of finding an account. With our easy-to-use comparison information and handy tips, you can find an account with the best features to access the greatest growth on your savings and set yourself and your child up for the future.
What is an education savings account?
Education savings accounts give parents and guardians a place to invest their money to pay for schooling costs down the track. These accounts are not just for parents, with grandparents or students themselves able to open one to save for later education. These were popular ways to pay for a child’s education in the 1980s but have been gradually phased out in favour of standard term deposits and savings accounts.
Funds specifically for education cover primary and secondary schooling, as well as tertiary education including universities and TAFE colleges. Education savings accounts allow you to cover travel and equipment costs relating to your child’s education, as well as programs for children with intellectual or physical disability. However, you can essentially use these accounts however you see fit in addition to paying for school costs.
It’s important to compare as many options as possible before deciding on which is best for you, which you can do right here with Savvy. You can consider your savings options here to help find the best account to build up funds for your child’s education.
What are my options when looking to save for my child’s education?
Banks and other financial institutions offer several options which suit long-term savings goals, such as those set by people saving for their child’s schooling. These include:
High interest savings account
These accounts offer you a competitive interest rate for meeting several monthly requirements. Earning a bonus high interest rate is usually conditional on keeping up a minimum balance and monthly deposits, as well as not withdrawing any funds. The top rates on these accounts are typically up to ten times higher than the base rate. By comparing with Savvy, you can find an account with a set of conditions you can comfortably meet to ensure you get the best return on your education savings. It’ll also help you compare the base rates, as this will be the percentage your interest is calculated on if you don’t meet the benchmark now and then.
Term deposits
Ideal for people who want to save over a long time frame, term deposits are seen as low-maintenance and low-risk ways to save. These accounts lock your funds in for a term of anywhere from one month to five years. You aren’t able to contribute to or access your funds until the term is up or you provide your bank with 31 days’ written notice. You’ll usually be required to put down a deposit on the account, usually in the range of $1,000 to $5,000. Interest rates on these accounts tend to be more competitive than those offered by standard savings accounts and will compound monthly or annually. Compound interest frequency depends on the financial institution you choose. You can use Savvy’s compound interest calculator to work out how much interest you could earn on your education savings.
Education savings account
Classed as a ‘scholarship plan’ by the ATO, these funds allow parents to put money away for their children’s education but still tap into it along the way. You will usually need about $1,000 to open an account and must retain that balance. They also usually have minimum withdrawals, generally about $500. These accounts give you a range of investment options to earn a return on your money, similar to a superannuation fund. These returns can vary depending on the mix of investments you choose. However, there is a very limited number of accounts like this still available in Australia, so you won’t have the same wealth of options to choose from as you would with savings.
Types of savings account
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Top tips for saving for your child’s education
Compare the best accounts with Savvy
Comparing with Savvy allows you to find the best savings account on the market to build up an education nest egg. Using our easy-to-follow comparison information and handy tips, you’ll be able to find an account with a strong interest rate to make the most out of your savings.
Have a long-term savings goal
Putting your child through school can be expensive when you take into account school fees and other expenses. Having a long-term savings goal in mind before opening your savings account will allow you to choose the best option to achieve it. You can use Savvy’s online savings goal calculator to work out how long it will take to reach your target.
Set up a budget
Draw up a budget and work out how much you can afford to contribute to your child’s education fund. This will make your savings plan more manageable in the long term. From there, you can compare your savings options to find an account which has a deal best suited to your plan.
Paying off your other debts
Clearing any liabilities, such as paying off a home or personal loan, will free up more of your income to make contributions to your savings account and save you on interest in the long run. While some accounts have minimum deposit requirements, you can use Savvy’s handy calculator to see how much you need to deposit to reach your target.
Frequently asked savings account questions
Our savings calculators
Use our savings calculator to help you calculate how much you could save over a set timeframe based on different deposit sizes and frequencies.
Your savings can put in work for you. Crunch the numbers to see how much interest you could earn on top of your interest by compounding daily, monthly and annually.
It's crucial to have a clear idea of your monthly household budget to see where your money is going and where it could potentially be better spent.
If you're applying for a loan or need to know what your salary is for your tax return, you can use our annualisation calculator to work out what you'll earn this financial year.
Setting savings goals is important. With this tool, you can work out how much you'll need to deposit to reach your financial aims over a set timeframe.
Just as important as knowing how much to deposit is working out how long it'll take to reach your goals. This savings goal calculator can help you do just that.
