Can you afford the rising cost of school fees?

Can you afford the rising cost of school fees?

Don’t underestimate the extras. Celebrate your child earning a place in one of the school’s sports teams, but expect to find yourself paying for several hockey tours of major European cities over their school life. Uniforms can be expensive, too. I am still smarting over having to pay £300 for a blazer my daughter hardly wore. Recommended You will also have to pay for exams. And that final term can feel particularly expensive, as the students are often sent home as soon as they have finished their exams: no school wants them running wild and painting rude words in weedkiller on the cricket pitch.

Remember, these are averages. Eton, for example, will set you back £14,698 a term (plus a £400 registration fee and £3,200 “acceptance fee”). On average, day fees cost between £5,442 and £6,895 a term, depending on age. There are three terms a year, so add that up over 13 years of schooling and you are probably looking at heading towards £250,000 to educate each child. This does not include nursery fees, which in London can approach £30,000 a year. If your child boards during their senior years, the fee will be £11,763 a term on average. That adds another £100,000 to the total.

Be prepared for fees to rise beyond inflation while your child is at school. The main costs for schools are staff wages, which go up each year. Also, schools with good reputations and facilities are in high demand among rich overseas families, so they can ratchet up fees, knowing it will not deter many “customers”. In 2019-20, fees rose 4.1 per cent on average. However, though the proportion of children attending fee-paying schools remains fairly constant at about 7 per cent, funding that choice is becoming harder. Rising house prices mean mortgage payments are taking a bigger proportion of household income, leaving less to cover school fees. So how can parents who favour the private option but find the finances difficult manage this challenge?

If you do commit to private education, consider what would happen if you and/or your partner died. Will you make provision for guardians to continue your children’s education? Have you a will in place and sufficient life insurance if necessary? There are ways to reduce the costs. Not boarding helps. If you find the right school this might mean moving closer to it. Starting later — at senior level or even for just the sixth form — is another option. However, by then children have established friendships, making the switch harder. Increasingly, many rely on grandparents. As a financial adviser, my advice to clients wishing to pay for grandchildren’s school fees is that they should not commit unless they are prepared to offer the same support to all their grandchildren. (And how many will you have?) They should also consider how to compensate any offspring who are childless. For those unable to start a family it must be doubly hurtful to see their inheritance spent on the children of siblings.

I have heard it advised that you should have half the money in savings up front before you commit to this path, expecting to pay the rest from income. That money will need managing — we would usually assign higher risk to assets earmarked to pay the later years and lower risk to the pot you will draw on in the next five. Managing this well can help address fee inflation risks. This is a major financial decision that will shape your whole life. If you misjudge the finances — or your circumstances change — you could end up having to take your children out of school at a critical point. You and your partner need to be united in this decision.

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