It’s no secret that the cost of private education tends to rise much faster than inflation in the longer term. In 2015, private school fees have risen by 3.5%, the lowest rate since 1994 according to the Independent Schools Council (ICS) 2015 Annual Census. However, despite rising costs, record numbers of pupils attend private schools.
Despite the common misconception that private education is just for Britain’s wealthy, there are some affordable ways parents can meet the cost of their children’s education.
The costs and bursaries/scholarships
Fee levels vary significantly by region from just over £3,000 per term for a typical day school in Wales to more than £5,000 per term in London. Many schools offer bursaries and/or scholarships to help less affluent families afford private education. Families whose disposable income is largely taken up by school fees are given the most support and many institutions actively canvas for these types of applicants. According to the ISC, over a third of pupils in private education now receive some form of financial assistance.
Start saving early
Work out the numbers for your preferred option and assess how much you need to save on a monthly basis. It helps to keep a budget. Starting to save, from the moment your child is born, could give you around 10 years to build up funds. Make sure that your investment strategy is sound. Proper investment can yield much better returns than the bank or building society in the early years, but don’t take too many risks when you need to draw down on the savings you have accumulated. If you are responsible for a child under the age of 16 you can make use of child benefits, and tax-free advantages of ISAs. But watch out! Junior ISAs can’t be withdrawn until the child is 18, so could only be used to fund university education.
State schooling until they move to secondary school
Starting a child’s private education later could save money – for a child entering school this year and leaving in 2028, sending a child to private school from age 11 could save you up to £100,000.
Both parents working
Having combined salaries with your partner can help you manage the costs of your child’s private education. This may increase the appeal of sending your child to boarding school. Whilst this is a more expensive option, it allows parents to continue to work without having to compromise family time during term time.
Help from the grandparents
Many grandparents are starting to get more involved in supporting their family and contributing towards their grandchildren’s education. Gifts of capital and out of income can be a successful way of reducing any inheritance tax liability whilst providing for future generations. Trusts might also be a useful way of reducing tax liabilities overall.
In summary, remember the three basics of financial planning. Make the most of all the tax breaks available to you, manage your investment strategy carefully and most importantly – plan ahead and start early. For more information on planning for your child’s future, get in touch with our Wealth Management team by telephone on 01254 679131 or by email at email@example.com.