Year on year, UK ‘Private school pupil numbers drop by 11,000,’ revealed the BBC last month—reporting on the latest school census data and in the wake of the removal of VAT exemption for private schools on 1 January.
That means that what was already a pricey enough investment (though there is wide regional variation, average annual fees for day pupils are approximately £18,063 and yearly boarding fees per pupil are more like £42,000+) went up by 20%. However, to put it into maybe a bit more perspective than that headline writer was aiming for, that 11,000 is just a 1.9% drop—there were still 582,477 pupils in England attended private schools, down from 593,486 the year before, and private school pupils now make up 6.4% of the total school population instead of 2024’s 6.5%.
The reality is that the VAT thing is an issue and some people will decide they can’t now afford to educate their children this way, but the long-term ROI of this form of schooling will remain high. Some families will just continue to do it for heritage and legacy, but parents who’ve fought their way up the greasy pole will continue to see finding the money for non-state education worth the sacrifice to provide access to smaller class sizes, excellent sport facilities and environments and one-to-one attention and support. It’s also worth noting that roughly 23% of students at Russell Group universities come from private schools and comprise 42% of those that make it all the way to Oxbridge.
Given public school alumni make up, as we said, only 6-7% of all those exiting secondary education, that’s pretty impressive—and shows the premium here. If your kid ends up at a top Uni with all that could mean for their future employment and life chances—graduates from that layer of Higher Education tend to have earnings 10-13% higher on average than those from other institutions with similar characteristics, says the IFS—then it’s almost a no-brainer to go this route. If you can afford it.
If you are ready to think about this, get in touch before big decisions like whether to commit to a school or accept an offer. Something we’d also encourage you to consider is if your plan should finish at A-Level Results Day, or if you should see it as one package all the way to the end their 3 or 4 year University career.
However, you cut it, it will really help you to model all this in advance, and we may well be able to work with you to get to a more affordable path, too. At such a meet, we’d both look to see what could be put in place to make sure that is a realistic option for you and not too much of a strain. As the school year winds to a close, now’s the perfect time, as school fee planning now could help reduce the stress that they have enough to make next term’s payment in September.
First things first: there’s a reason they say you gotta put your own oxygen mask on first. Yes, little Johnny and Jane’s future is paramount, but your own future retirement /emergency cash fund is also important, so make sure that side of the equation isn’t put out of whack by anything you do for them.
Think long-term
Your personal private school fund could be drawn down and used to top up any portion of the fees that is paid out of regular income. On that basis, let’s think about the best way of getting all this sorted, then. First off, we need a baseline for what this stuff will really cost. Here are some of our assumptions when modelling school fees-
- Because it tracks wages rather than CPI (which is higher), school fee inflation is higher than normal inflation, which one way or another seems to be on its way back down to at least 2%. So. we assume 3.9% yearly versus a long-term CPI assumption of 2.5%. The data shows that since 2010, private school fees in the UK have seen increases averaging between 3% and 4.5%, so it’s best to err on the side of caution
- Little Johnny and Jane will cost you more at 17 than they will at 7. Fees go up as the children age, and when they’re doing their A-Levels at Years 12 and 13 it’s going to be a lot more than when Years 7 and 8 at prep (primary) school. A lot of parents we work with find mix and match in response, starting off with a local primary school but then switch to a private one when the child reaches the age of 11 to reduce the total cost
- You might need to decide between boarding and day—both options are always available, and children might well benefit most over their time in primary and secondary by a mix of the two
- Don’t be shy about asking if there is a helping hand here. It’s always worth exploring scholarships and bursaries that might be available (scholarships are usually awarded based on a child’s academic, sporting, or artistic prowess, while bursaries are means-tested and awarded based on financial need)
- The real bill is much higher than the termly invoice: think, school trips (not sure I’ll ever get over how much they found to ask us for the skiing ones) and cultural excursions, lacrosse and other sport kit costs, food and snacks, music lessons. These can add up to a fair few thousands on top, three times a year
- As mentioned, there’s regional variations that you might want to play with too—London and the Southeast just are going to be more ££££ than, say, the North.
Add all this up and I think we can agree you’re going to benefit most from a bespoke plan based on your family’s vision for all this and what’s available to you in your part of the world. Based on my experience, I’d also say that socking the money away for this well before J&J are out of nappies is also good for the old mental health—a lot of clients we speak to want to know that there is a sum of money invested dedicated and available for the children’s education which can be drawn down.
Smart ways to get smart A-Level Grades
If you could ring fence such a sum it would be very sensible, as it would guarantee that fees would be met even if the worst happens (parental illness/redundancy/business or salary slides, etc). A planner can help you work out what this sum is today (in net present value terms) if you think that would help, and we can also talk to you about specialist insurance and school fee protection plans
In fact, we can do a lot more of that and help you come up with a specific investment strategy for this. Thoughts here:
- Try and match your investments to the timing of liabilities, so up to 3 years in cash or cash equivalent, medium term 3-7 years as a bit more equity risk but still cautious, and long-term 7+ years and a tad more equity risk, we can create a bespoke allocation that is as tax efficient as possible
- Obviously, you want to use ISAs and general accounts but not pensions or any other less liquid investments (they have uses for other financial safety plans, fear not)
- Look at what that annual bonus could do for the cause. If you work in a sector that does this, like financial services or IT, ‘lumpy’ income bumps like any annual bonus you can realistically add in or equity compensation could really help
- If an option, gifting from grandparents could both help their descendants and help reduce their Inheritance tax liabilities, especially if the fees come out of excess income (i.e., they leave the estate immediately). Trusts are also well worth looking at, by the way; a good IFA can help move this discussion along, but only if it makes sense for all parties concerned.
Do your worst, Chancellor! (Actually… please don’t)
Summing up, planning for school fees can seem daunting, but with the right guidance and a well-thought-out plan, it’s entirely achievable.
However, it’s crucial also to ensure your plan needs regular monitoring (annually at the very least) to ensure you remain on track. At the end of the day, you and your family’s circumstances are unique, so why not get informed and professional advice from someone like us tailored to your needs—and which will help you plan with confidence no matter what Rachel Reeves decides to throw at the private school ecosystem next.
- This article is provided for information only and does not constitute personalised advice or a recommendation.
- The value of investments and any income from them can go down as well as up, and you may not get back the amount originally invested.
- Tax treatment depends on individual circumstances and may change in the future
- The Financial Conduct Authority does not regulate cashflow modelling or tax advice.