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Raising The School Fees Finance


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Invest your way to private school, says James Rainbow


he cost of school fees continues to increase – some 4.6 % in 2011 alone with average day school fees now £10,965 per year and average


boarding fees £25,152 per child1. A typical 40% tax payer now needs to earn more than £22,000 extra money every year just to cover one set of school fees.


So what does this mean for parents in the so-called “squeezed middle”? Sadly for some, hard decisions have had to be taken with around a third of private school fee payers considering either reducing or stopping these payments altogether. For the majority, it may simply be a case of cutting down the extras, such as music or reducing private tuition, but for a few children a new school beckons. Increased fi nancial pressure means that more parents are even considering educating just one child privately while the other is sent to state school. But how on earth do you decide which child goes where, and how will this aff ect your relationship in years to come? It’s a decision that needs to be made with sound fi nancial planning. While many people have established


specifi c savings or investments to pay for school or university fees, less than a quarter (23%) of those who are paying for education have any form of long-term investment or saving in place2. This is a staggering admission and a real concern that so many people are embarking on the private school journey with such inadequate planning. Unbelievably, almost a quarter (23%) of Independent Financial Advisers (IFAs) claim that a signifi cant proportion of their clients are relying on an inheritance in order to pay for private education. Of those who already have savings or


investments earmarked for education, a fi fth (20%) started to contribute to this “fund” before the birth of their fi rst child, while 29%


www.fi rstelevenmagazine.co.uk Autumn 2011 FirstEleven 51


did so when the child was less than 12 months old. However, one in ten (10%) of those with an educational fund did not begin to start saving until the child was between three and seven years-old. While it is obviously ideal to start saving or


investing for education as soon as your child, or grandchild, is born, with sensible advice it is still possible to build up a decent pot by the time the fi rst bill lands on your desk. With the introduction of university tuition fees, it is even more important that those considering private and higher education for their children establish a long-term savings and investments plan at the earliest opportunity.





A signifi cant proportion of clients are relying on an inheritance to pay the fees


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