Is the private school model in Australia broken?

Are Private School Fees in Australia Out of Control?

For many Australian parents, the dream of providing their children with a perceived excellent private education is becoming increasingly impossible. In some cases, with private school fees in major cities like Sydney and Melbourne now exceeding $40,000 per year, families are questioning whether the traditional private school model is still viable or fundamentally broken. 

Private school with football field

The Growing Burden of Private School Fees

Over the past decade, increases in private school fees have outpaced wage growth and inflation, and this trend seems to be continuing. According to the AFR (11 February 2025), in 2025, fee increases at high-end private schools ranged from 5 per cent to 9.8 per cent. This is in sharp contrast to the current headline inflation rate of 2.4 per cent. The most expensive private schools now charge ~$50,000 per annum in years 11 and 12.

While some parents justify these fees as an investment in their children’s future, others are beginning to question whether the premium price tag is worth it.

What’s Driving the High Costs?

Private schools justify their fees by pointing to several factors:

• Post-COVID-19 fee freezes:  During COVID-19, many private schools did not increase their fees in order to assist families facing financial pressures.

• State-of-the-art facilities:  Many schools have invested heavily in infrastructure, including science labs, sports complexes, and performing arts centres.

• The best-qualified teachers:  Private schools often claim they offer more competitive salaries to attract and retain top educators.

• Reductions in government funding:  Government funding to private schools is subject to a formula based on the parental income of students that attend that school. As a result, over time, some private schools will receive less government funding. 

• Increases in operating costs in excess of the inflation rate:  For example, teachers’ salaries.

• Extracurricular programs: Private schools offer various enrichment activities, from international trips to robotics clubs and elite sports training.

• Small class sizes:  Many private schools claim they maintain lower student-to-teacher ratios to enhance learning experiences.

  
  

While these factors contribute to the overall quality of education, the data suggests that private schools charge more for the prestige factor than actual educational outcomes.

Is the Private School Business Model Broken?

There is increasing concern that the traditional private school business model is unsustainable. Key concerns include:

• Exclusivity vs. affordability:  As fees continue to rise, fewer families can afford private education, leading to a reducing accessible market.

• Over-investment in prestige:  Many private schools compete based on reputation rather than educational innovation, prioritising expensive facilities over effective teaching models.

• Reliance on government funding:  Despite charging high fees, many private schools still receive significant government subsidies, raising ethical questions about resource allocation.

• Lack of return on investment transparency:  While private schools claim to offer superior outcomes, research shows that students from high-performing public schools can achieve similar academic results without the hefty price tag. So, are the claims of a superior education often made by private schools a scam? A 2022 study by the Australian Educational Researcher examined whether there was a performance gap between public and private school students in standardised literacy and numeracy tests. They found that “No differences were evident after controlling for socioeconomic status and prior NAPLAN achievement. Using longitudinal modelling, we also found no sector differences in the rate of growth for reading and numeracy between Year 3 and Year 9. Results indicate that already higher achieving students are more likely to attend private schools, but private school attendance does not alter academic trajectories, thus undermining conceptions of private schools adding value to student outcomes.”

Alternative Business Models for Private Education

Given the financial strain on families and the growing questioning of the value of traditional private schooling, alternative education models are emerging. Here are some innovative approaches that could disrupt the market:

• Hybrid online and in-person blended learning models where students receive a mix of in-person and online instruction.  This can significantly reduce overhead costs by reducing space requirements while maintaining high-quality teaching. For example, schools could have double the number of students, with half studying online whilst the other half learn in-person, rotating on a weekly schedule.

• Online schools are emerging, proving that digital-first models can deliver strong educational outcomes.

• Subscription-based education instead of paying large lump sums upfront. Schools could explore a lower monthly subscription-based model, where parents pay a lower fee starting when their children are born. This would enable parents to spread the cost of their child’s schooling over a more extended period of time. 

• The rise of micro-schools - small, agile schools that focus on personalised learning could challenge the need for large-scale private school campuses. Essentially, “schools without the football fields” would have lower operating costs, making this option more affordable. 

• Top-up learning - parents could consider public schooling that gets “topped up” with private 1:1 tutoring. Services such as those offered by Cluey Learning are an excellent example of this opportunity. This would reduce the cost significantly and, at the same time, deliver highly personalised learning.  

So, are private schools worth the cost?

Whilst private schools in Australia remain attractive based on their perceived prestige and resources, the ongoing increases in private school fees are likely to be unsustainable for many families. It is, therefore, inevitable that private schools will need to innovate their pricing and business models.  Unless they do so, they risk losing a significant portion of their target market. Put bluntly, private schools cannot continue to rely on grandparents subsiding their grandchildren's education forever!  As these pressures on the private school system continue to increase, new models such as online tutoring, hybrid education, and micro-schools will likely gain traction.

The real challenge for private schools is whether they are willing to recognise that they have a real problem and, therefore, need to adapt or whether they’ll be left behind in an evolving education landscape.  For families weighing their choices, the key question is no longer "Can I afford private school?" but rather "Is a private school education worth the cost compared to other options?"