Even if your school days are now a distant memory, you might recall your parents complaining (sorry, “gently mentioning in passing” after you got a D in GCSE geography) that it cost an arm and a leg to pay the private school fees. The bad news if you’re considering private education for your own children is that it now costs two arms and two legs. And a kidney. According to a study by Lloyds TSB in August 2012, average fees have risen by 68 per cent over the last decade, from £6,280 in 2002 to £11,457. That’s 1.8 times faster than retail price inflation over the same period.
Worse still, this is only the average price. Some of the best-known schools in the UK cost three times the average. Cheltenham Ladies’ College is £33,600 per year for borders, Eton £30, 981. You might save a small sum on food during term time, but you still need an awful lot of pre-tax income if you’re not going to starve yourselves.
So, let’s say you’re starting a nuclear family now and want to send your two 11-year-old children to a private secondary day school in the 2020s. If fees continue to rise at a similar rate over the next decade, seven years of education could set you back around £270,000. Educate them both privately from the age of five and you’re looking at half a million.
Or perhaps you want to send them to one of the top public schools. Five years there could be half a million. Add another five years at prep school at current trends and the total bill could be over £750,000. And that’s before you consider piano lessons, football boots, school uniforms etc.
Time to start saving? Or at least to ask the grandparents if they’ve considered downsizing?
Is it worth it?
It probably depends on whether you or your parents-in-law are paying. And on the child. The figures certainly suggest that it’s not money thrown into a bottomless pit. Some 51 per cent of A-level students at independent schools achieved an A or an A*, compared to a national average of 27 per cent. And, of course, a good education is about more than just good grades. The best schools offer smaller classes, broader teaching, greater confidence, likeminded friends and excellent facilities, allowing a child to develop a lifelong passion for anything from music to drama, sport to art.
A report published in November 2012 by the Sutton trust found that 68 per cent of leading figures in public service were privately educated, 63 per cent of lawyers, 60 per cent of senior members of the Armed Forces and 59 per cent of business leaders. (Although this probably says more about private education 20 years ago – and the kind of families who chose it – than it does about the merits of private education today).
It’s also worth pointing out that the headline costs might not be as bad as they seem. According to the Independent Schools Council, 33.2 per cent of children receive some sort of help with their school fees. And although private school fees have risen by an average of 68 per cent over the decade, this rise has slowed in the past five years to just 19 per cent – nearly in line with an inflation increase of 18 per cent over the same period.
On the other hand, you might well wonder if private school fees are worth the sacrifice in other areas of your family life. It won’t be much fun living on baked beans at home and never going on holiday if little Jonny isn’t making the most of Harrow (or if Harrow isn’t making the most of little Jonny). And as you start to consider the alternatives, you can console yourself that you’re in good company. Over the last decade, the number of pupils in private schools has fallen by 13 per cent. According to the Lloyd’s study, many relatively well-paid professionals, such as architects, IT professionals and engineers, are now priced out of private education.
So you could find that the school you knew and loved 20 years ago is now filled only with the children of bankers and Sheiks. You might like that idea. You might not.
What are the alternatives?
You could, of course, join the 93 per cent of parents who send their children to state school. In 2012, a record 63.3 per cent of British students accepted by Cambridge University were state educated. And just think what you could do with all the money you save. Invest £11,000 a year into an ISA instead of spending it on soon-to-be-forgotten Latin vocabulary, and you could build up a healthy pot by the time your children need the money for university tuition fees and a house deposit. Plus you’ll have more in the meantime to spare on extra-curricular activities such as music lessons, sport trips and private tuition.
This route is not, of course, without its catches. According to research published in March 2012, property prices near the most sought-after state schools can command a premium of 42 per cent. So if you’re not lucky enough to live in a good area already, that’s another £90,000 you’ll need to find from somewhere.
Maybe it is time to sell a body organ after all.
Risk warning: As with all investing, your capital is at risk. The value of your portfolio with Nutmeg can go down as well as up and you may get back less than you invest. Past or future performance indicators are not a reliable indicator of future performance. A stocks and shares ISA may not be right for everyone and tax rules may change in the future. If you are unsure if an ISA is the right choice for you, please seek independent financial advice.