Parents 'underestimate' education costs

A Commonwealth Bank survey found 55 per cent of parents who expect to send their children to private primary and secondary schools, believe it will cost less than $150,000.

But figures from the Australia Institute show it can cost as much as $270,000, the bank said.

The average cost parents expected to pay for private education was $152,000, according to the survey results.

The survey, of 403 parents who had recently had a child, also found 47 per cent of parents did not feel financially well prepared to meet the costs of educating their child.

Most parents expected to be up for more expenses after their child finished high school.

Of the 91 per cent who want their child to go on to higher education, 77 per cent said they were planning to pay all or part of their higher education expenses.

While most Australians expected to make sacrifices to meet the costs of education by spending less on items such as clothes and cosmetics, family holidays and home renovations, 18 per cent said they didn't expect to make any sacrifices at all.

Commonwealth Bank financial planning general manager Tim Gunning said parents needed to get the right advice about saving for their children's education, which can be the second largest expense for a family after a mortgage.

"We can't stress how important it is to start saving early - especially if they have more than one child," Mr Gunning said.

The survey also asked parents about their usage of the federal government's maternity payment lump sum plan.

It found 66 per cent were using it on short-term baby expenses such as nappies, 34 per cent on general household expenses, 16 per cent on debts, 15 per cent on new items such as cars and 14 per cent on home loans.

Seven per cent of respondents said they had used it on something completely unrelated to the child, while 11 per cent used it to invest in an education plan.