Education Fee Planning

With news headlines continually reporting on failing state schools, many parents feel that the only options open to them to get their children into a good state school, is either to move house or change religion! Both are totally impractical and can be financially restrictive. Initial selling and moving costs need to be taken into account as is the fact that many house prices in sought after catchment areas are often much more expensive than similar sized homes outside that area. 

Deciding to adopt a particular religion as a tactic to increase the chances of your child being accepted into a high performing faith school is a gamble that not always works. Although parochial schools tend to accept those students who follow a particular faith, there are limited spaces available for non-practicing students. However, because faith schools are often associated with a high standard of teaching, there is a high demand and long waiting lists for a coveted place regardless of your faith. 

One way to provide your children with a higher quality education is to enrol them in a private school. However, most parents quickly pass over this option due to the very high costs associated with it. Joe Luong, founder of www.MyEggNest.com disagrees. ‘With some careful financial pre-planning this can become a very real possibility that’s well within the reach of lots of parents’. 

The independent children’s’ savings website www.MyEggNest.com suggests that parents should: 

• Start saving as soon as a child is born by setting up a child savings account or an ISA. Parents can save up to £7,200 a year, tax year free of income tax and capital gains tax and for those aged over 50 the allowance recently increased to £10,200.

• For a new born child, the cost of educating them from age 11 to age 18 at a cost of £10,000 per annum in today’s terms, assuming a 5% investment return and 6% school fees inflation, would need an overall fund of £166,510. To pay for this you could either invest £75,758 today or start making monthly savings at a rate of £747 per month.

• ‘Parents could also benefit by investing in a tax-efficient manner for example using an ISA wrapper or by using their annual capital gains tax allowance. This could currently save them 40% of the costs or indeed 50% next year, of school fees when compared to methods of savings which are taxed. Likewise being efficient for inheritance tax-purposes could also lead to a saving of 40% of the costs for grandparents wishing to help funding in this area,’ Says Steve Weisner, Financial Planner at Radcliffe & Newlands.

• Investigate scholarships and bursaries that could contribute 10% to 100% of school fees. Bursaries are means tested to provide financial support for children who could not otherwise afford the cost

• Consult an independent financial advisor to plan for your individual circumstances or utilise www.MyEggNest.com free ‘Ask the Expert’ advice on suitable financial options. Ask the Expert 

Choosing a school is one of the most important decisions you will make for your child so you really need to plan well in advance. Until recently, the problem of paying for education was one that concerned only the wealthy. Now it can affect any parent and child. With forward planning and/or some good advice, you should find that providing your offspring with privately funded education is far from a financial nightmare.

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