The cost of private schooling continues to rise – we break down the numbers.
The cost of private education has risen dramatically, making it harder for many to afford. The rise of private school fees has far outpaced growth in middle-class incomes.
Research by the Financial Times found that between 2003 and 2013, wages of traditional middle-class professions, like engineering, law and academia, contracted in real terms by 1.7%. During the same period, fees at private schools like Alleyn’s and Westminster rose by 49% and 38% in real terms.
Sending two children to private school between the ages of four and 18 now costs £610,000 on average, which is putting many families under pressure. In fact, research conducted by Lloyds Bank found that 37% of parents with children in private education had considered moving them to a state school because of the high costs.
Saving for private education
If you’re planning to educate your child privately through primary and secondary school, the earlier you start saving or investing the better. Compound return means that your money has more chance of growing faster if you invest more early on. You can then reduce the amount you put in as your investment grows.
Investing this money in an ISA is a good place to start, as it’s a tax-efficient way to save. For the 2015-16 tax year, you can invest £15,240 in an ISA, and choose how and whether to spread this across a Cash ISA or a Stocks & Shares ISA. If your family are keen to help, that can be another good option. Each grandparent can gift up to £3,000 a year that’s exempt from inheritance tax. And they can also set up a ‘bare’ trust, which can be a tax efficient way to save money that you can then access immediately – as and when you need it.
Help on hand
The cost of sending your children to private school may be extremely high but financial support is often available. The Independent Schools Council found that 33% of all pupils were receiving financial help with school fees in 2015, totalling more than £800 million – a 7.3% increase on last year.
While scholarships are based on merit, bursaries are awarded according to financial need. Both can be a great help in cutting down the cost of private education.
If private schooling from age four to 18 is simply too expensive, you could send your child to a state school until the age of eight and save £94,000, which you can then invest for private schooling after the age of eight.
Alternatively, you can send your child to state school and supplement their education with private tutoring. The Sutton Trust found that nearly a quarter of secondary state school pupils in England and Wales receive extra tutoring.
Whichever option you choose, the earlier you start saving the more you’re likely to benefit as your money grows.
Capital at risk. ISA rules apply. Tax treatment depends on your individual circumstances and may be subject to change in the future. Past performance is not an indicator of future results and future returns are not guaranteed.