When and how should I save for school fees?

Almost 523,000 youngsters attended independent schools in 2017* – that’s 7% of UK children – which means a lot of families are making a long-term financial commitment.

Experts agree it's important to make decisions as soon as you can to help ease the burden of paying school fees.

But the good news is that you can plan well-ahead to pay for your child's, or grandchild’s, whole school career.

Parents usually choose to pay by using investments** or from their regular income. If you can afford it from your current income then it’s a good idea to protect your income in case your wages stop, otherwise your child might have to move school if you can no longer pay.

The Independent Schools Council (ISC), which represents 1,300 schools across the UK, recommends parents should start planning how to fund education early – but also to look into means-tested assistance with fees.

General secretary Julie Robinson said: “Parents save for school fees in a variety of ways and are advised to start planning fees funding at an early stage.

“Most schools offer a level of means-tested fees assistance for parents who cannot otherwise afford the full fee so we advise parents to ask the school about the possibility of bursaries. ISC schools provide £760 million in fee assistance overall so children can come to our schools whatever their background. Over 5,700 pupils pay no fees at all.”

Here are five key things to do for your child’s education funding:

• Plan ahead to start as soon as you can;
• Look at a range of options, such as paying from your income, investments or gifting from grandparents;
• Think about what else you'll need on top of fees, such as music tuition or trips;
• Commit to being able to pay for the duration of their school life;
• If you're paying through wages, ensure your income won’t dry up, by taking life cover or critical illness cover. 

Stuart Johnstone, an independent adviser with our financial planning partners Wren Sterling, said: “I see a lot of clients who come to me when their child is about to start primary school. That doesn’t leave a lot of time to save and can impact on other previously made financial plans.

“Those who don’t want to pay through their income opt for savings and investments – such as investment bonds and ISAs where they can draw down amounts as and when they need to – and loans such as an offset mortgage.

“Lots of clients choose to pay school fees through income but they need to be mindful of protecting their income if they go down this route. Death in service cover for example may not be enough to pay for the remaining years in education.

“For several reasons, getting the right protection in place – whether that is life cover, critical illness cover or protecting one’s income – is important. No parent would wish a child to be forced to leave a school and cope with the loss of a parent at the same time, for example. The same could be said towards a parent being diagnosed with a critical Illness.”

School fees, costs for uniforms, music tuition, out of hours care and transport – as well as tempting trips abroad – should all be factored in, although some of this would also apply if they attended a state school.

Parents should be prepared to commit for the duration of school life to ensure continuity, Mr Johnstone said. To cover this, starting saving as soon as possible – even from before your children are born – will mean you benefit from long-term compound interest. And if you are planning to use an investment, then a longer term timeframe gives a better opportunity to smooth out any ups and downs of investment returns. 

*Independent Schools Council figure.

**The value of your investments may go down as well as up and you may not get back the full amount invested.

Please note, the Financial Conduct Authority does not regulate university/school fees planning.