Our schooling culture means tuition fees are a huge draw on millions of family budgets – it is estimated parents in Australia now fork out around $10 billion a year for school tuition. But the household economics of school fees gets strangely little attention. "This is a big part of many people's lives, but it is not talked about very much," says Jack Stevens, chief executive of Edstart, a firm providing tailored loans for school tuition. Research by Edstart has drawn attention to the financial sacrifices parents are prepared to make for private schooling. The firm's most recent survey, conducted last July, of 500 families with children at private schools showed only half of all families with children at private schools can meet the fees from their disposable income. The rest are drawing down on savings or taking on debt. About one-in-six families were paying school fees with credit card debt.

Stevens says many families feel the financial pinch when they have multiple children in the later years of high school. "Fees might creep up to a point where the costs exceed available income but there is a real unwillingness to shift children especially in the late years of high school," he says. "That's when it becomes a problem and things like credit cards come into play." Edstart's research showed one in 10 families with children at private schools were drawing down on their mortgage to pay tuition fees.

Grandparents are also making a significant contribution. Members of the extended family contributed to private school fees in 7 per cent of families in the Edstart survey. A separate 2015 survey by industry super fund Rest found a third of retirees saying that they plan to draw down on their superannuation to help pay school fees. *** The Herald's annual private school fee survey, published on Saturday, shows the cost of tuition will top the $37,000 mark at several elite Sydney schools this year. That's equivalent to nearly half the average weekly ordinary time earnings in NSW. It is a similar story at some of Melbourne's elite private colleges. The latest estimates by education investment fund service ASG show the total cost to send a child born in 2018 to a top Sydney school from preschool to year 12 will be an eye-watering $547,414.

ASG's chief operating officer Bruce Hawkins says school fees are the biggest cost but that the figure also includes extra curricular activities, school camps and excursions, uniforms, textbooks and travel to and from school. However, executive director of the Independent Schools Council of Australia Colette Colman says the figure represents "the upper ranges that parents can reasonably expect to pay" and that the majority of private schools charge fees far lower than the ASG estimate. About 13 per cent of NSW independent schools have annual fees of $20,000 and above, while 40 per cent charge below $5000, according to ISCA figures, which include both secondary and primary schools, which typically have far lower fees. Experts have trouble pinpointing why so many Australian parents are prepared to pay for private schooling when there are publicly funded options available of high quality by global standards. "The fact that it has become so prevalent in Australia to send secondary school students to private schools takes it beyond what we might think of as a purely rational economic decision," says Pete Goss, director of the Grattan Institute's school education program.

"For a lot of the population it has become the default thing to do." Factors like religious affiliation and family tradition are strong motivators for many parents. Private schools also tend to do well on performance metrics like NAPLAN and HSC results. But a University of NSW economist, Associate Professor Gigi Foster, points out that's to be expected given the well-educated parents and highly-resourced home environments of those who tend to go to private schools. Some academic studies have found private schools don't outperform public schools when socioeconomic advantage is taken into account.

"My sense is that the main thing being purchased is not actually academic excellence but networks – the people that students will know going out of high school that could help them in future careers," says Foster. "So you may send your kid to Scots College or Sydney Grammar because you think the future Mayor or Sydney or head of some big company, or whatever, will also be sent to that school. It's much more of a social choice." Foster suspects that for many parents private schooling may be what economists call a "symbolic expense". "Symbolic expenses are what we pay in service to an ideal that we hold internally but there may be no real connection between that money any outcome on the ground," she says. "Parents may believe 'we are the sort of family that wants the best for our kids and we will spend the money on a private school' without really thinking much about whether they are getting something that is good the child when they do it. Symbolic expenses are very human."

*** The price of secondary education jumped 4.1 per cent in the year ended September, official figures show. That's more than twice the overall rate of inflation and double the rate of wages growth across the economy. Chief executive of the Association of Independent Schools of NSW Geoff Newcombe said that teachers' salaries and the cost of technology are the main reasons for fee rises. "Fees clearly have to go up because you can't freeze wages," Newcombe says. "The other part of it is that schools are finding an increasing cost is technology. All of those costs are rising well above inflation."

Newcombe says changes to federal government funding for schools under the Gonski 2.0 model announced last year may also impact fees at some schools. "Some schools have put notices out to parents saying that fees will increase by this much while others have said they won't change much, it depends on the way they've done their budgeting," he says. ASG's chief operating officer Bruce Hawkins says competition between private schools is also leading to rising costs. "Schools compete with each other and invest more into infrastructure, technology and programs and pass that on to parents," Hawkins says. "Supply and demand are also a factor. Parents are prepared to send their kids to private schools and waiting lists are very long. Fees are still expected to keep rising, we don't see that coming off in a hurry."

The arms race for facilities between Sydney's top private schools has meant that state-of-the-art sports stadiums and swimming pools are no longer enough to stand out. St Catherine's Waverley is currently building a $43 million "multi-purpose complex", complete with a fly tower, orchestra pit and aquatic centre, Shore School has designed a new sports centre complete with strength and conditioning facilities, three indoor basketball courts and an indoor Olympic-sized pool, and Scots College boasts a hypoxic chamber which simulates altitudes of up to 3000 metres above sea level and is used by elite athletes to improve their performance. Newcombe says many private schools across the state are currently full, despite annual fee hikes. "Parents obviously see the value of having their children in independent schools," he says. "Schools are available at a variety of fee levels and parents pick the school they can afford.

"Some people want their children at a high-fee school for reasons including that they offer extra curricular activities, their pastoral side, the smaller class sizes." While demand for prestigious high-fee colleges is strong, growth in the overall sector has been mostly driven by lower-fee independent schools. The proportion of NSW students who attend non-government schools, including independent and Catholic schools, has climbed steadily to 34.63 per cent in 2016, from 33.32 per cent in 2006, according to a McCrindle report based on Australian Bureau of Statistics data. For secondary schools the private school share in NSW rises to 41 per cent. Based on the current growth rate, non-government schools are expected to educate almost 38 per cent of all NSW school students by 2031 - a total of nearly 550,000.

As fees at some top tier private colleges creep towards the $40,000 per year it begs the question: How high can they go? Will fees hit a ceiling at some point? Not necessarily says Gigi Foster. "These are suppliers trying to find what the market will bear," she says. "If you have whole bunch of consumers who really value whatever it is they are getting out this private school thing it could be the suppliers of those schools have not even half-tapped the surplus that these consumers are getting and there's a lot more willingness to pay." Even so, the rapid growth in private schooling means the sector overall is probably more exposed than before to any deterioration in economic conditions, especially rising interest rates.