Early financial planning can give your child the advantage of the holistic education on offer at independent schools, as Nicholas Grenfell-Marten explains
Rarely has the issue of planning for school fees been so critical for parents. With the global economic situation still creating difficulties for the business sector and additional concerns about the on-going negotiations around Brexit, shrewd parents are happily secure in the knowledge that the education of their children is protected. But whilst there are many parents who have planned well in advance for their children’s education, the issue of fees is a surprisingly low priority for many others, and the realisation of the problem only hits them when the first fee bill hits the doormat.
As a bursar, I am always surprised at the number of parents I saw who have given little (or in some cases, no) thought to the payment of fees. Fortunately most parents are able to meet their commitments, but some struggle considerably. In the last year, it has been more difficult for some parents to find the fees, due to a combination of employment worries, pay caps, rising costs and reduced equity/ability to borrow against their properties. I am, not surprisingly, very wary of the parent who is late with the first term’s fee for their child – it does not bode well! There are more than 580,000 children being educated in around 2,300 independent schools in the UK, of whom over 537,000 are educated in the 1,374 schools in membership of the Independent Schools Council (ISC Annual Census 2020). Of the pupils at ISC-member schools, over 70,000 are boarders. The average boarding fees per term for pupils at ISC-member senior boarding schools in January 2020 were £11,609, with day fees at £6,895. ISC-member prep boarding school fees are a little less, at an average of £8,621 per term for boarders and £5,442 per term for day pupils. The average boarding fee across the prep, senior and sixth-form age groups at ISC-member schools was £11,763.
While the school fees may seem high, it should be remembered that they cover a great deal in addition to the provision of a first-class education in small classes; the 2020 ISC Census shows a teacher/pupil ratio of 1 to 8.7, compared to around 1 to 18.9 in maintained mainstream schools and such favourable ratios do come at a price. Parents need to offset the fees against what they would have to provide if the child were not at that school, especially if they are boarding. For example, busy working parents may not be in a position to chauffeur their offspring to rugby coaching, music or dance lessons, whereas all these, and many other activities, can take place at the school in a thriving environment.
When are fees paid?
The school will send the fee invoice before the beginning of each term (in the summer they are often sent up to six weeks before term starts), and the fees should be paid in full on or before the first day of each term. Whilst schools increasingly offer a variety of payment methods, ranging from lump-sum payments to monthly direct debit, many are now insisting on the payment of fees by direct debit only.
The majority of schools require at least one term’s notice of withdrawal of a child and, if this is not given, a further term’s fees in lieu may be payable. Whilst appearing to be tough, it should be remembered that it is not always easy for a school to fill a place at the last minute.
What do fees cover?
Fees usually include tuition, many recreational activities, accommodation and food (in boarding schools and many day schools). They may also include basic laundry and textbooks, but uniforms will not usually be included. School uniform can cost thousands of pounds over the course of a child’s education, particularly if the uniform is unusual, such as top hat and tails, as is the case in a small number of independent schools.
Parents are often surprised at the amount of additional charges that can appear on the bill (in most cases after the event), but these extras will be agreed in advance with parents or an upper limit agreed, for example for pocket money. It is always worth checking the extras on the fee bill to make sure that you agree with them. Likely extras could be private music lessons, computer purchase, horse riding, dry cleaning and outings such as theatre trips. Parents should ask their school for an indication of average termly extras to assist in their planning and schools should be open with parents about the level of additional charges.
What about fee increases?
Schools are very conscious of the cost of education to their parents, but in most cases there will be an annual fee increase. This is usually imposed at the start of each academic year and schools try to give parents as much notice as possible of a fee rise. In recent years, fee increases have been in the region of 3-6%, although they do vary from school to school, region to region. The fee rise in 2019/20 was 4.1%. Whereas increases are often greater than inflation, schools are faced with many factors when planning their annual budgets. Schools are labour-intensive organisations, with around 75% of costs directly attributable to staffing. They have also been hit recently by large increases in utility and food costs. Schools as charities aim to make small surpluses to reinvest in the establishment, and the efficient management of resources is a key role of the school’s bursar. Schools are continuing to invest in improving their facilities, particularly as interest rates are so low at the moment, enabling them to invest in their assets. It is therefore very important that parents plan for inflation in school fees for future years.
How do parents go about planning for the future?
Parents who wish to provide an independent education for their children need to start planning and, more importantly, saving as early as possible. Although the economy at the time of writing is very flat, investment plans will usually benefit from long-term exposure to the equity market, although the value of such investments can go up or down. Some brokers recommend drip-feeding money into an investment to minimise the effects of the peaks and troughs over a longer period.
The Individual Savings Account (ISA) is a useful tax-free scheme, and allows you to save your annual tax-free allowance of £20,000 in a cash ISA, a stocks and shares ISA or an innovative finance ISA, or a mixture of all of them. Each parent can participate in an ISA, so it is possible to invest £40,000 a year tax-free in two ISAs and a useful fund can be accumulated prior to the child starting his or her education.
It should be emphasised that the author is not a financial adviser, and parents need to take independent financial advice before making any investment decisions! The weekend newspapers run regular articles on planning for school fees in their personal finance sections, and these are well worth reading. There are also brokers that specialise in investment schemes for school fees, but be careful not to end up paying for an expensive ‘educational’ wrapper to put round an investment that could have been bought on the open market. Many schools operate advanced- fee schemes, often called ‘Composition Fees Schemes’, that will attract a discount, and the sooner these can be joined, the better. Being in the school’s advanced-fee scheme will not guarantee a place at the school, so make sure the money can be paid to another school if necessary.
Can parents get assistance with the fees?
The 2020 ISC Census revealed that 34% of pupils in ISC schools (179,536 pupils in total) received some sort of assistance with fees (an increase of 5.5% on the previous year) and 84% of the assistance came direct from the schools themselves. Schools are very conscious of the need to offer support to pupils for a number of reasons: to broaden the intake, to recognise excellence and to meet their charitable objectives. As most independent schools are registered charities, they are required to demonstrate public benefit – fee assistance is one of the main ways they
can do it.
There are two main sources of support for children in schools:
Scholarships – Scholarships will normally be awarded by the school as the result of a competitive examination and an interview, and may unusually cover up to 50% of the fees, although increasingly the level of scholarships is being reduced in favour of means-tested bursarial support and a maximum of 10-20% is now more common. Scholarships in a senior school will usually be awarded at ages 11, 13 and 16, with internal candidates having the opportunity to sit for the latter two awards. Competition for scholarships is very strong, but, subject to the maintenance of satisfactory progress through annual review, they are normally held for the duration of the pupil’s time at the school.
Bursaries – Bursaries may be awarded in addition to a scholarship, where financial need is demonstrated and the child would otherwise be unable to enter the school. They may also be awarded should the parents fall on hard times while the child is at school and have difficulty with the fees.
Parents who believe their circumstances justify a bursary award should approach the bursar and ask to complete an application form, noting that account will be taken of siblings at other independent schools. Most schools use a standard application form, based on the Independent Schools’ Bursars Association model, which seeks details of parents’ financial circumstances, supported by documentary evidence and including capital assets. In many cases, the parents will be asked to an interview at the school, often with the bursar, to discuss the application, in advance of the application being determined. Some schools will undertake home visits to assist in the assessment. The hard-nosed bursar will not take kindly to an application for a bursary being delivered by the family’s chauffeur in the Bentley. Awards are made on need! Means-tested bursaries were awarded to 41,629 students in 2020 valued at almost £440m, an increase of 4.3%.
Most schools will review bursaries annually to ensure that an award remains justified, and they may only be awarded until completion of the next public examination. As previously mentioned, many schools are attempting to increase their bursary funds (and therefore bursary support for parents) in order to better demonstrate the public benefit they provide.
There are also a number of grant-giving trusts, but the terms under which they make awards are usually quite stringent and in most cases the trust will be looking to support vulnerable children. The possibility of a grant will very much depend upon how close the child is to a public examination and whether there are special circumstances that would justify assistance. Parents in this position should contact the Educational Grants Forum.
Can I get a discount for more than one child?
It is worth asking! Many schools do offer discounts, but it is becoming more common to go through a bursary application process rather than discounts being available as a matter of course.
What if I run into difficulties with the fees?
There will be parents who, having started down the independent education route, run into financial difficulties for whatever reason and it is important that they let the school know of the problem as soon as possible. Make an appointment with the bursar to discuss it and see if the school can help.
As a bursar, one of my biggest frustrations is that I often only find out a parent is having problems paying when it is too late. Schools are pretty good at sending reminders, but the worst cases only come to light when the parent is called in to discuss the problem. Schools will certainly try to help, and the first option is often an agreement to pay in instalments if the parent is not already doing so or to offer some other repayment plan. It benefits nobody if a debt is allowed to accumulate and become an increasing burden to the parents, particularly if the school is left with no option but to recover the debt through the courts. Whilst recourse to legal action is a last resort option, schools will be prepared to use this course to protect those parents who do pay on time.
Schools will also reluctantly exclude a pupil if the fee is not paid on time (often at half-term), and this becomes extremely difficult for the child. The importance of communicating with the school is paramount.
Nicholas Grenfell-Marten is a Consultant Bursar, having worked for nearly 30 years’ in the role and is a past Chairman of the Independent Schools’ Bursars Association. He currently lectures to serving and aspiring heads on school finance and works as a support consultant in the independent school sector, advising schools on finance and management issues. He previously served as bursar at a number of schools, independent and maintained, day and boarding.