Many parents prioritise private education as one of the ways to give their children the best start in life.
This means that one of the costs they need to factor into their financial planning is that of school fees – and paying for private education can be expensive, running into thousands of pounds.
The Independent Schools Council’s 2019 Census Report states that the average fee is more than £5700 per term for day schools in London, which presents a significant outlay for one child, let alone families with two or three children.
The cost for the rest of the country is not far behind, with an average of £4763 across the UK, per term.
And if parents prefer boarding schools for their children, they are currently looking at an average of £11,565 per term. These figures rise substantially if parents have set their sights on an Eton education for their youngster: current fees per term for this college exceed £14,000.
Regardless of which school children attend, the cost means setting aside a significant sum. So what savings plans are available for parents who want to build up a fund for their children’s school fees and when should they start saving?
Sooner rather than later
Starting as soon as possible could be ideal, according to Jason Hollands, managing director of Tilney Group in London, who says: “Families who aspire to send their child to independent schools need to plan well ahead as the costs are formidable, even for those on high incomes, and last year they increased, on average, by 3.7 per cent – well ahead of consumer-price inflation.”
While Neil Jones, wealth management and tax specialist at Canada Life agrees that being quick off the mark makes sense, he also points to other expenses which may have to be factored into planning, as he says: “Parents have other expenses at this time, such as buying a bigger house or car, but it is ideal to start saving for school fees from the time of the birth of the child.
And the additional expense of saving for school fees can potentially be squeezed in, as Emma-Lou Montgomery, associate director, Fidelity International explains: “Even saving smaller sums such as £50-£70 per month can help, as the money has a long time to grow. The power of compound interest can make all the difference.”
Where and how to save
Parents also must decide how and where to save for their child’s school fees, and might wish to make use of their own Isas, which have a 2019/20 allowance of £20,000: “These might be a first port of call if not already being used,” suggests Mr. Hollands.
“Premium bonds and children’s savings accounts might also be suitable,” says IFA Keith Churchouse of Chapters Financial Planning in Guildford, adding: “Up to £50,000 can be deposited in premium bonds – they are a good vehicle for saving.”