Planning for school fees

There are so many upsides to a private school education - but the fees are a large, lengthy financial commitment which needs careful planning.

Where to start?

A private education has been described as the single most important investment that parents can make for their child, and here at Talk Education we are evangelical about the benefits. But with independent school fees taking up a significant proportion of most families’ household income –and increasing faster than the rate of inflation each year –choosing a private education is also a large, lengthy financial commitment that requires careful consideration and planning, and possibly even extensive saving and sacrifice. In partnership with the team at private bank Hampden & Co, we bring you some guidance on the steps families could take to plan for their children’s school fees – from where to start to how to ensure you are covered for unpredictable fee increases.

First things first: what do school fees cost?

According to the Independent School Council’s 2023 Census and Annual Report, the average termly fee for a day school is £5,552. For boarding schools, this termly average is £13,002.

Source: ISC Census 2023

Fees vary from school to school, so it’s vital to do your research, make comparisons and understand exactly what’s included – and what isn’t.

Despite ISC schools’ best efforts to keep fee increases down, the average day-school fee has increased by 5.8 per cent over the past year, while the average boarding fee has grown by 5.2 per cent. We have noticed increases in some popular schools to be significantly higher than this for the year 2023-24.

The ISC’s Census also examined trends in school-fee increases, showing how volatile they can be:

Source: ISC Census 2023

It’s easy to see that schools are under pressure to keep fees as low as possible, while also keeping up an arms race to build even newer, shinier facilities, recruit the best possible staff, outpace their competitors and meet the expectations of parents – many of whom are making huge sacrifices to afford the cost of a private education.

On a more positive note, the ISC also reported a 5.9 per cent increase in fee assistance or bursary provision – and in 2022-2023, financial aid worth over £1.2billion was provided in schools. It’s important to remember that even if the fees seem overwhelming, a place at an independent school doesn’t need to be unobtainable. Forget those preconceptions about a private education being the preserve of the privileged: financial aid is an important priority for many schools, and there has been a real drive to provide assistance for the children and families who need it most. We’ve compiled an at-a-glance guide to bursaries, and highlighted everything you need to know about securing fee assistance, with further information about the nuts and bolts of financial aid and what schools are doing to help.

There’s more good news: we’re increasingly hearing from schools that are restructuring what they offer in order to bring a private-school education within the financial reach of more families. Some big, well-known boarding schools are opening their doors to day pupils for the first time, adapting their existing fee model to attract a much more local market, and, in turn, offering the same gold-standard education at a more affordable price tag. Others pride themselves on their ‘no-frills’, lower-cost offerings, where they prioritise a fantastic education and unrivalled pastoral care over state-of-the-art facilities. If you know where to look, you’ll find plenty of options – and that’s where Talk Education’s parent advisory service comes in.

We sat down with Hampden & Co to find out more about how families can ensure their finances are in the best possible shape to pay for school fees.

How early should families start planning and saving for their school fees? Is it ever too late to start?

The sooner you can start planning, the better. But there’s no one-size-fits-all answer. If you can start saving before your child is born, then do – but each family’s personal circumstances will be unique. However, with the cost of independent school fees rising each year, most families will find it challenging to cover these from their current income alone. Hampden & Co can work closely with a family’s team of professional advisers (including wealth managers, mortgage brokers and solicitors) to look at their full balance sheet and prepare for the financial commitment in the best – and most thorough – way possible.

What are some of the primary-income sources that families might use to help with school fees?

While there are no hidden solutions, there are a few ways families can prepare for school fees.

If you’re starting with a blank sheet of paper, take a look at your savings, income, mortgage, portfolio investments and expenditure. Think about your key priorities and visions and get to grips with the whole, big picture.

Some families might think about setting up an investment portfolio and using the income to pay for school fees. However, this is a relatively slow route to growth, and may be best suited to families who are planning many years in advance (and ideally before their child is born).

A shorter-term fix could involve remortgaging your house through an equity release. This could be a viable option for a family with substantial equity in their property, and sufficient income to cover the monthly repayments.

What about grandparents and other relatives? How can they help with school fees?

Some families might be lucky enough to have grandparents in a position to help with school fees. By moving money down a generation, there are positive implications for inheritance tax planning, too.

Hampden & Co can also work with grandparents or other extended family members to set up an investment portfolio or create a savings package which can then be put towards school fees.

How can parents plan for potentially volatile fee increases and ensure their savings will cover unpredictable rises?

Although fee increases almost always exceed inflation, it’s impossible to predict exactly how fast and by how much they are going to rise each year. So the key thing is to ensure you are always one step ahead. And it’s not just fee rises that families should think about – there will always be unforeseen costs throughout your child’s educational journey that will need to be budgeted for.

One huge benefit of working with a bank such as Hampden & Co is that clients will always have someone to turn to who really understands the nuances of their personal finances. The team can give advice on how to best use your income (or generate some emergency borrowing to help), rather than relying on guesswork.

The worst-case scenario: what happens if you can’t keep up with fee payments?

If your financial circumstances change suddenly and unforeseeably (for example, after the death of a family member), many schools have temporary hardship funds available and will step in where possible. However, this is by no means a long-term solution, and if you can’t keep up with fee payments, it is never worth risking financial ruin in order to keep your child in their school.

To summarise:

Get advice – a financial professional can help you look at your overall circumstances and help you plan accordingly
Start planning as early as you can
Always factor fee increases into your financial planning
Consider if another family member may be able to help

How Talk Education can help:

We’ve designed our school pages to give you a clear picture of each school, with our editorial review and the latest data on everything from the subjects they offer at A-level to academic results and leavers’ destinations. In the Fees and Bursaries section on each school’s page, you’ll find the termly fees for each year group, and detailed information on that school’s bursary programme.

You can save your favourite schools to your parent dashboard, and compare data – including fee information – across a range of schools.

If you have more questions or need bespoke advice for your family, our parent advisory team is here to help.

Hampden & Co offers banking expertise to personal and professional clients across the UK. Each client has a nominated banker who delivers a service tailored to their needs, and those of their family and business. London: Third Floor, 36 Dover Street, London W1S 4NH. Tel: 020 3841 9922 | Edinburgh: 9 Charlotte Square, Edinburgh EH2 4DR. Tel: 0131 226 7300. hampdenandco.com

Where to start?

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