When asked about their reasons for sending their children to a fee-paying school, parents cited a variety of reasons including disillusionment with the state school system, smaller class sizes, greater opportunities in creative subjects or even better discipline. Underpinning it all is a desire for our children to get the best possible start in life and to realise available opportunities.
There’s no doubt that the costs of paying for our children to attend an independent school are far outweighed by the benefits.
But those costs can nevertheless be significant, and there can be times where making a large lump sum payment is inconvenient and can put a strain on cash flow. At certain points fees can also increase significantly. Many parents speak of a sharp increase between primary and secondary education, as well as the additional expense of some school excursions such as ski trips or overseas exchanges.
Part of the plan?
Only a minority of parents referenced a specific financial plan to see their children through a fee-paying school. These parents tended to be traditionalists who, having attended independent schools themselves, had arrangements in place, such as a trust, to ring-fence the fees throughout the duration of their child’s education. The majority of parents, however, haven’t made such plans, and for them, it can involve some creative solutions.
“We sold our Q7 straight away to fund the first year. Now I am driving around in a banger on a wing and a prayer that it does not breakdown. But our son is in the first year and now we just have to manage things,” one parent said.
The default among those involved in the research was to pay fees from salary payments and to then maintain a budget to ensure the availability of funds for the following term.
What are the alternatives?
When considering alternatives, many will turn immediately to credit cards or savings, though others revealed that they would consider more radical approaches including re-mortgaging or selling property in order to pay for fees.
With Brexit around the corner though and the cost of lending potentially set to increase, many could see significant movement in their monthly outgoings, particularly for those on tracker mortgages. Against that backdrop, perhaps there’s the need to consider a different approach that will effectively remove lump-sum payments and allow for a proactive monthly approach to paying fees.
Peace of mind
School Fee Plan is set up in conjunction with school bursars to give parents a viable solution to fee payment which avoids lump sums and allows for repayments to be made in manageable monthly direct debits.
While technically a finance product, School Fee Plan doesn’t require security (where your home or other valuable assets are used as ‘security’ against the loan) and surprised parents with its competitive APR of just 5.6%. This means that, based on a £12,000 fee, total interest payable would be £358 over the year, a little under £30 per month. In addition, there’s flexibility to add in the cost of excursions and trips, either at the beginning of term or even part way through, simply add the cost of the trip to the product and spread the cost over your remaining repayments.
For more information call School Fee Plan on 0330 123 9720
*Research completed by Bdifferent Financial Services Market Research in January 2019.