It’s that time of year when the parents of around half a million children across the country prise open their cheque books and hand over a hefty sum to pay for private school fees.
The figures make painful reading. Over the last school year fees averaged £3,365 per term for day schools and £8,003 for boarding – multiply by 3 (terms) and then pay out of taxed income...ouch!
There’s a bit of consolation in that fees last year (and, from what I can see, this year too) have only risen by about the same as inflation (4% last year and I reckon 3-4% this year). Historically they’ve raced ahead of inflation.
Soaring fees can partly be explained by a private school’s main overhead being teaching staff (typically half of overall expenditure), as earnings tend to rise faster than prices. But average earnings over the last 9 years have risen about 30%, versus 66% for average day school fees and 56% for boarding (prices, measured by RPI, rose 27%). You can view a chart here.
So there’s little doubt, in terms of affordability, that school fees are more expensive than ever. But if you’re keen to give your child a private education is there anything you can do to lessen the financial pain?
Unless your child enjoys a scholarship or bursary then there are really only four options open to you: save a bucket load of money before they start school, earn more, borrow, or receive help from relatives (e.g. grandparents).
While savings money before your child starts school is a nice idea, in practice you’ll need to save a substantial sum to make a meaningful difference. Let’s say your child attends private day school between ages 11-18; that would cost about £80,000 (assuming fees increase 4% a year, but ignoring other costs e.g. uniform and trips). To fund this fully from investment you’ll need to have saved around £55,000 by the time your child is 11, equivalent to about £300 per month over the 11 years (assuming 6% annual return). Save what you can, but don’t expect it to fully solve the problem.
Use our School Fees ‘How Much’ calculator to see how much educating your child privately might cost.
Earning more or receiving help from relatives, if you can, is the simplest option. It might even help your parents reduce a potential inheritance tax bill. But neither is always feasible.
Borrowing should be a last resort and only really makes sense if you can do via your mortgage, else the cost could be prohibitive.
If you have decent equity in your home then releasing some of it via a competitive re-mortgage is likely to be the most sensible option. If you want to see how school fees might dent your overall finances use our School Fees ‘Affordability’ Calculator.
Finally please be very wary of financial advisers offering ‘school fees plans’ and/or ‘specialist school fees advice’ – it’s just a load of marketing baloney. Sadly there are no nifty or magical solutions, short of winning the lottery.
You just need to prepare yourself to save, invest, borrow and work very hard...
You can read more on our school fees page.
School fees figures sourced from the Independent Schools Council.