All boarding schools charge fees, but these vary depending on the type of school and boarding requirements. Here are some typical costs (per term) for 2021 (ISC Census, 2021).
| Age group | Average fee per term |
|---|---|
| Sixth form | £12,573 |
| Senior | £11,784 |
| Junior | £8,684 |
In state boarding schools, tuition is paid for by the state. Extras can add considerably to the bill (perhaps up to 10 per cent of fees), depending largely on which activities your child chooses to take part in – for example, music tuition or school trips. Allowance should be made for expenses relating to books, entries for public examinations, stationery and uniforms. Schools do have different approaches to extras, and what is included in the fee, so this is worth careful scrutiny.
Planning for school fees
It is important to prepare for the commitment of paying fees for several years, having in place a strategy that will enable the school fees to be met in the event of death, an illness or loss of income, and considering how fees need not be entirely dependent on earned income, so ensuring a child will be able to complete their education. Planning strategies can significantly reduce the financial burden of school fees, so take professional advice.
Planning can be covered under six headings:
- spread the cost of fees
- invest a lump sum
- set up a regular savings scheme to provide funds to cover future fees
- have payment protection
- set up a trust fund
- look for financial assistance.
Spreading the cost
Many parents experience difficulties in funding school fees continuously from taxed income. There are several schemes available designed to help parents in this situation. The purpose of these plans is to improve cash flow and hence make school fees more affordable. In essence, this involves spreading an element of the school fees over a longer period of time. For example, a parent may be able to afford comfortably 70 per cent of the school fees from income, but the additional amount may prove to be a strain. In this instance, it may be possible to take out a draw-down plan against the equity in the family house to spread the school fees for the balance of 30 per cent over say a 10-, 15- or 20-year period.
Investing a lump sum
Early investment of capital can avoid the need to use income for providing for school fees in later years, or at worst go a significant way towards reducing reliance on income. The need for tax efficiency and flexibility of approach can be tailored to individual requirements. Some schools offer specific schemes tailored for advance payment of fees, and if you have a lump sum available, it is worth exploring this as an option.
Regular saving
Regular saving for school fees should ideally be started as soon as possible. The longer you save, the less the impact will be on income when school fees fall due – or consider some sort of endowment or life assurance policy. Income or capital sums derived from such policies are normally tax-free.
Payment protection
It is important to ensure the payment of children’s school fees can be continued in the event of a change in your personal circumstances due to serious illness, injury or death. A lump sum can be provided by life insurance. Income protection plans can guarantee income through to retirement in the event of specified illnesses or accidents. Some schools may offer temporary fee support in cases of unanticipated hardship (including loss of income or employment as a result of Covid-19) – but it is important not to rely on this being the case, and support may only be provided for a short duration. If you do experience a change in circumstances that affects your ability to pay, it is important to be open with the school from the outset. Fees refund schemes are available which can provide cover in the event of absence through illness or accident and these are well worth considering.
Trust planning
Trust planning can be useful for grandparents who wish to make provisions for school fees and achieve inheritance tax benefits at the same time. Trusts offer the benefit of transferring the tax liability on future income and capital gains to the children to use their personal annual allowances. There are basically two types of trust:
- where the children have a right to any income arising from the trust and also own the capital
- where the distribution of capital and income is at the discretion of the trustees.
Maintenance trusts offer both of the above. Financial advice should of course be sought when establishing trusts.
Financial assistance
Other educational awards
Many schools also offer closed awards to children of members of the Armed Services, as well as clergy, teachers and some other professions. Some give help to children of former pupils, to single-parent families and orphans, or concessions for brothers and sisters. The conditions of these educational awards can vary enormously. They are often described as fee concessions, reductions or discounts. Some are not available annually and depend on the terms of an endowment. Others simply say special consideration may be given to pupils in a particular category.
There are many options to consider and there is a great deal of financial help available. Read this Guide thoroughly and explore schools’ websites. Above all, do not be afraid to ask schools exactly what they have on offer. It can be a lengthy task, but potentially very worthwhile. Start planning as early as possible and do not be afraid to take advice.
Further information
SFIA Schools Fee Planning
Tel: 0845 4583690