The cost of private education in the UK has risen by 49% in a decade, according to research published last year.
In 2018, the average fees at private prep schools were £13,026 per year. Fees for day pupils at private secondaries average £15,000 versus £33,000 at boarding schools.2 That means six years at prep school translates into £78,156 (assuming no price rises) while five years at a secondary day school comes to £75,000.
Not everyone thinking about sending their kids private would necessarily expect to spend more than £150,000 – and that’s just for one of them. Moreover, while double-income couples may feel in a stronger position to consider the option, they have other worries. Between 2008 and 2017, the cost of childcare for young children rose more than four times faster than wages – and in London and the East Midlands, it rose seven times faster.1
Of course, children come with other costs attached too, even if you keep things simple. The latest Cost of a Child report from Child Poverty Action Group (CPAG) shows that raising a child to 18 years old comes in at £75,436 for a couple and £102,627 for a single-parent family – add in childcare and, according to CPAG calculations, those numbers rise to £155,100 and £187,100, respectively.4
In short, before you even start thinking about university, you could find that putting a child through the private system is the most significant financial decision you’ll ever make.
Battle for the classroom
Yet it hasn’t put parents off. In fact, despite the rate at which costs are increasing, there is a record number of children at private schools, according to the Independent Schools Council (ISC).5 Almost 523,000 pupils currently attend 1,301 ISC schools, the highest level since records began in 1974. In short, although costs are spiralling, more and more parents are sending their children to UK private schools.
How, then, is it possible to turn an expensive aspiration into a reality?
“Providing a good education can be one of the most valuable gifts parents or grandparents give to children “While the financial implications can be daunting, the key to affording school fees is to plan as early as you can. For many, inheritance or income will provide the main source of funding, but saving soon after a child is born can help to build a fund over ten years, ready for when they go to senior school.”
Putting the money into a savings account doesn’t offer much potential for capital growth and is unlikely to be the best solution for building a fund for school fees – all the more so when the Bank of England base rate is 0.75% and inflation is 1.9%.6 An alternative route to cash is investing the money in stocks and shares. Yet that means taking on additional risk and therefore requires investors to adopt a longer time horizon. Historically, however, returns from stocks and shares have outperformed cash.
Working out how best to invest for school fees involves determining your own attitude to risk, your investment timeframe and the way in which you plan to pay for them.
One such option is using your annual ISA allowance, which permits tax-efficient contributions of up to £20,000. But with a myriad of options available, seeking the right investment strategy is not easy. Doing your homework and seeking out trusted, expert advice is, as always, the key to long-term success.