Financial Planning

Many families are in the position to make provision for independent school fees through various financial planning options. Whether you’re planning for the future or your children are already attending independent school it is never too late to start planning for your child’s future. There are several ways of easing the financial burden and a financial adviser will be able to help.

Paying from income
Most parents pay school fees (or save for them) from net income, but planning and investing in advance can reduce the amount that has to be met later. If you are planning more than ten years in advance, there is a range of schemes to enable you to put aside money out of your income on a monthly or annual basis. If you have left it until later, it might still be worth taking out insurance policies or other investments four or five years before your child is due to enter school.

Using a capital or lump sum
There is also a range of possibilities for parents with a capital sum. As with regular investments, the earlier a capital investment is made the greater the potential savings will be, but decisions will depend on the funds available, level of school fees, timescale, attitude to investment risk and tax effectiveness. Some schools operate schemes - known as 'composition fees' - whereby school fees are paid by a capital sum in advance direct to them in return for a discount on the school fees. Make sure the 'composition fee' can be transferred to another school if necessary.

Immediate funding
For most parents, saving in advance is not possible or any savings made does not cover the full cost of school fees. Even so, there are ways of spreading the cost and thereby relieving the load which involve a flexible borrowing facility. Typically, these schemes are either secured against home equity or unsecured and backed by an appropriate policy.

Monthly payments
Schools increasingly enable parents to pay school fees in monthly installments and some have their own monthly direct debit payment facility; ask the bursar if this is possible.

Help from Grandparents
Many grandparents help with their grandchildren's school fees. Even modest contributions on a regular basis can make it possible to afford an independent education. Grandparents can often invest more tax efficiently than parents and help reduce their potential inheritance tax liability.

Blogs on school fee assistance
Looking for school offering bursaries or other types of school fee assistance?