Fees at independent schools now average £17,000 per year. A private education costs money, we all know that. But what are the most effective ways to prepare, save and invest to give children the best possible schooling?
Despite the cost of putting pupils through independent schools, the numbers continue to rise. According to the Independent Schools Council 2018 census, a record 529,000 children are now attending independent schools across the UK.
A private education doesn’t come cheap. Five years at an independent senior school will, on average, cost around £85,000 based on ISC figures. Continue into sixth form and that figure rises again.
Many factors encourage parents and grandparents to pay for their children’s education. Government cut-backs across the state school system, increasing family expectations, and a desire to get into the top universities all influence thinking.
Why should I save for school fees?
The big question many people ask is why should they take professional financial advice when planning for school fees?
Funding a good quality education will benefit the recipient for many years, across an entire lifetime. Like any significant investment, however, there are many ways to meet the costs and also various ways to spread the payments in the future.
That’s where sound financial planning will always give you a head start, just as a great education will be the springboard to exciting career options as an adult.
How can you pay for a private education?
Parents have a range of savings and investment options available to them when considering how to fund their child’s education at an independent school.
Much will depend on where the parents are on their own financial life journey. Whatever path they choose, planning early and taking financial advice will help reap dividends in the future.
For example, buying that first family home is likely to be a priority. Also, if you have several children some investments will offer greater flexibility than others. Finally, those with a large extended family might find it easier to spread the financial load with help from relatives.
– Make use of ISAs
Juggling family life is never easy. The car often needs to be replaced as the family expands. That kitchen extension gives more space but eats into savings. And as the children grow it’s great to take them on memorable holidays.
It’s easy to see why people put off saving towards school fees.
Still, if you have ten years or more before your child is due to go to senior school, sixth form or university, that’s plenty of time to choose the most appropriate financial investment to achieve your goals.
A junior ISA can be regularly topped up as soon as the child is born. If you are prepared to take more risk and have time on your side, a stocks and shares ISA could work out well in the longer term.
Either way, parents can make use of their own personal ISA allowance and invest into an annual tax-free fund (up to £20,000 for 2018-19 financial year). Investments can, of course, go up or down.
– Remortgage or loans to pay schools fees
Borrowing money does not sound ideal, but this is to invest in your children’s future. If you have paid down a large part of your mortgage, and the value of your home has appreciated considerably, a re-mortgage is one of the most affordable ways to borrow cash.
Alternatively, with interest rates still very low, taking a short-to-medium term loan is another option. As with other financial decisions, it’s always best to seek independent advice to help understand and calculate the merits of borrowing and how it will affect your cash flow.
– Pension pots to pay school fees
For some older parents, or even grandparents, being able to access their pension pot at 55 years of age means the option to draw a tax free cash sum. This can be invested over the short term to be used across several school years.
It is also possible for retirees with children to use pension income towards school fees, especially if they have other income streams coming in. However, drawing down too much cash too soon can have implications during the latter years of retirement.
Wise words about money
Logic Wealth Planning offers impartial advice to ensure that you select the best route to saving towards private school fees.
If you’d like to talk about savings and investments give us a call or send us an email. We’ll take it from there and help you consider options that suit your lifestyle.
Call 0808 1234 321 or email firstname.lastname@example.org