Many private schools have increased fees for the 2021/22 school year above the rate of inflation suggesting slower fee growth triggered by the pandemic has come to an end. Tonbridge School, for example, as increased boarding fees by 6.5% for the new school year, while Eton has hiked its fees by 3.75%. Last year average school fee inflation slowed to just 1.1% as around 7 in 10 schools cut or froze fees in the wake of the pandemic, according to the ISC Census 2021.
Private school fees have effectively risen by an average of 5% each year since 2000 – despite slower fee inflation in 2020. In comparison, the Consumer Price Index has risen by an average of 2% over the same period. Fees have typically risen at a far faster rate than inflation, which means parents and grandparents will have paid hundreds of thousands of pounds in school fees (in some cases more than £500,000) by the time their children and grandchildren pick up their A Level results and head off to university.
The average full-time boarding fees are currently £12,000 per term (£36,000 a year) and these are likely to increase for the new school year starting in September. Private school fees seem like a mountain to climb. But rest assured, the situation is not as bleak as it may appear. There are several options open to those looking to fund the cost of school fees. Indeed, a strong financial plan coupled with tax-efficient strategies may help reduce your tax bill.
As with all aspects of financial planning, the route you take will depend on your personal circumstances and long-term objectives. One option is to take advantage of investment tax and inheritance tax (IHT) breaks. If you have several years ahead of you, saving is of course also an option. Grandparents may want to examine whether they can reduce potential IHT liabilities when paying fees. Trusts can also be used to cover the costs, while scholarships or bursaries will also help lessen the impact of funding private education.
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School fees are soaring, so you need to start saving early – The Sunday Times
Boarding school fees soar by twice inflation – The Sunday Times