Private schooling in the United Kingdom – that globally recognisable world of quality education delivered in picturesque surroundings – could be on the verge of some seismic changes. The cost of sending a child to private school in the UK has come into sharper focus of late as the twin pressures of aggressive inflation and planned tax changes converge in a perfect storm.
The general impression around private schooling is that those that pay for it can easily afford it, but the truth is often more nuanced. Aspirational families will stretch their budgets to the limit so that they can afford the benefits of private education. And even for those with relatively more wealth, the sums involved are never insignificant. For wealthy families, school fees are usually viewed as one of the larger costs in life that need to be mapped out properly, particularly when there is more than one child involved.
The parents of a student finishing A-levels in 2023, that attended an averagely priced boarding school from the age of seven, will have paid close to £378,000 in total fees, according to research by Weatherbys Private Bank published earlier this year. The equivalent cost for a day school student would have been around £186,000 for the same period. The estimated cost of educating a child starting the same journey this year could be around £688,000 for boarding and £344,000 for day school. And this is all before extra costs such as clothing, equipment and school trips are factored into the overall bill.
Taxing times ahead?
In addition to these already steep rises, parents are now also facing the prospect of an even more daunting jump in fees if there is a change of government in the UK. Predicted to win power at the next election, the Labour Party has promised to quickly add VAT to private school fees – a tax that currently stands at 20%. It is also possible private schools could see other discounts in areas, such as business rates, be withdrawn, pushing up the cost even further.
There are a variety of financial planning tools that anyone thinking of sending their children to private school should familiarise themselves with. Cashflow modelling and consolidated reporting are two of the most useful tools for families looking to assess their wealth and plan out their financial future.
Cashflow models examine your assets and debt along with income and expenditure so projections can then be created on future finances. Consolidated reporting provides a full picture of someone’s wealth by creating a financial statement that brings everything together. This approach gives you an umbrella view of your financial situation and makes managing your assets simpler. The combination of these two tools can allow a family faced with spiralling private school costs to properly assess their ability to meet future financial obligations.
Mapping the horizon
The rise in costs for private schooling also means it is prudent for families to carefully consider the source of funds for the full period of education, which can typically run to over ten years. Worrying about invoices as and when they come up can increase the possibility that the costs will come as a surprise and potentially be harder to cover, even for high-net-worth individuals. Do you currently have the full amount available to cover the cost of fees? Will the fees be paid through inheritance or gifting, and when will those funds be available? How will the extra costs outside the fees be covered? Thinking these things through at an early stage means tough questions can be answered early and problems down the line can be avoided.
Staying on top of the cost of private schooling is essential to ensure that the children in your family can prosper on their educational journey without the unnecessary disruption that poor budgeting can bring. It is reasonable to always expect private school costs to rise, but with the potential soaring price of private school fees, it means it is more urgent than ever to use robust financial planning when dealing with education.