Getting Schooled: Public vs Private Education

There are two schools of thought in the public vs private education debate.

The first, with which I sympathise, is that a tiered system whereby a child’s success is increasingly determined by birthright is inherently unfair. Ever increasing wealth disparity will only exacerbate this problem into the future.

Financial inequality is a problem about which little can be done – in this context. Eliminating its benefits would necessitate restricting people’s personal freedoms. If one has the means and the inclination, they should be able to invest in their child’s future, be it through personally devoting more time to their child’s education or through funds via tuition or indeed by paying for a full private education.

Students will never be granted the same opportunities irrespective of wealth. It is an unfortunate constraint of the system. Those trapped within their ideology must exit the conversation here.

The question is not about ideals, it is about money. Our money.

It is a statistical fact that private school students receive less taxpayer funding than their public counterparts, thus for every student enrolled in a private school – we, the taxpayer, save money. Conversely, if students – or more aptly, their parents – withdraw from private school in favour of the public system, it will increase the burden on the public purse, potentially by billions of dollars per year.

Thus even if it violates our better judgement – or dreams of equality – it remains in our financial interests to accept the system as it is or even increase private school funding to make private education more accessible.

Or so we are told, by equal and opposite ideologues, but they conveniently neglect half the story.

Before considering the other half, consider this.

A private school education can cost upwards of $30,000 per year. To this sum the government contributes, on average, an additional $8,546.

If the net value of a private school education fell by $8,546 (around 22%) how many would abandon private education?

None? A few percent? More? All?

Your answer to that question will determine your position on the matter, so make your best estimate.

Some additional information which may help.

The elite private schools return multimillion dollar profits, thus removing funding would have no effect on their daily resources, only their profit margins and accrued wealth. Students would not be affected.

Were funds withheld from marginal schools, and assuming costs are fully absorbed by the school (wage cuts, less frequent facility upgrades, etc.), the average private school student would still receive almost twice the funding as those in the public system (their current personal expenditure of over $30,000 vs the average funding of $15,768 in the public system). To those who believe money is a pivotal factor, and clearly they do given their choices, the decision remains simple.

However, if the market opts to increase fees rather than cut costs, some may be priced out of the private system. An additional $8,546 – or fraction thereof, as the market would likely implement both cost cutting and revenue raising measures – would price some out of the market. But how many?

Register your best estimation in this quick poll.

Ok, done?

Those constantly reiterating that ‘private schools save money’ are presenting a misleading oversimplification, the entire system must be considered. The half of the equation they omit is that private schools don’t merely reduce expenses; they’re also an expense themselves.

In fact, they cost more than they save.

  • Private costs: $8,546 per student
  • Public costs: $15,768 per student

The difference gives the savings of a private education. Whilst we already know the costs, above.

  • Savings of private education: $7,222 per student
  • Costs of private education: $8,546 per student

In the event of withholding all funding, on average, each student who leaves increases expenditure by $7,222, whilst each who stays reduces expenditure by $8,546.

Scaled to the near 1.2 million students in our private school system these numbers become staggering.

Currently, private school funding costs $10b per annum. Consequently, cutting funding whilst retaining current numbers within the private system would see the budget benefit by $10b each year.

However, if those cuts precipitate a mass exodus, educating all our nation’s students in the public system would incur an additional $8.5b each year ($18.5b in public funding less the $10b saved on private funding).

Between these two extremes exists a tipping point; the number of students who would need to exit the private system in order for there to be no net cost.

Based upon statistical averages, that tipping point is 54%.

Was your estimation above or below 54%?

If you believe more than 54% of private students would abandon the system without the average 22% government co-contribution, then you think the private system is good value.

If you believe less than 54% would leave, then you think it is in our nation’s financial interests to withdraw private school funding.

But ultimately your guess is of no more value than mine. Discovering the real-world impact of private school participation rates in the event of a funding cut is the only way to settle this debate.

Below is a representation of the expected costs and savings by cutting private school funding, separated into 10% gradations. The figure above each column is the ultimate impact on the budget bottom line for the given percentage. (ie. If 20% of private students return to the public system, treasury would stand to gain $6.31b per annum.)


wpid-private.jpgNB: The statistical average produces a linear relationship (see thumbnail). However, some private schools receive more funding than others. Those more dependent on government funds will be under more pressure and therefore more likely to change to the public system. This means the difference between private and public funding will be reduced at the beginning of the chart and increased towards the end. Subsequently the blue columns will begin to fall away more sharply then flatten out, while the green will begin flatter then rise more quickly, as estimated in the primary illustration. The 54% crossover point remains the same in both cases.

Now you know the data and its implications, do you think the taxpayer should de-fund private schools?

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