100k to spend on DC's education but how?

[mustbeabetterwife]

First time post here, but a very long time lurker on the education board.

DH and I have some inheritance money (£100k) to spend specifically on our DC's education. The money has been given to us on the promise that it is only to be spent on their schooling.

DS1 is 3 and DS2 is 1 but I want to start thinking now about where and how the money will be allocated.

Bit of background:

DH earns a decent salary. He doesn't want me to be too specific, but let's say more than 60k and less than 100k.
I am a SAHM. Hope to return to work when boys are at school. Will earn no more than 30k.
We have 2bed house in South East and have no plans (or funds) to move.

DH was educated privately and I state. Both went to RG universities.

DH would like the boys to be privately educated but I'm less keen. However, with a reasonably hefty mortgage, there is absolutely no chance of us being able to afford the fees.

So, how do we spend the inheritance money as specified?

Option 1 - Put both boys into prep and then transfer to state (top up with tutoring).

Option 2 - I'm not really sure on this one. Secondary school fees are 15k a year so that would only fund one son through secondary school, there are no grammar schools where we live.

Option 3 - Both boys into state primary and secondary and private for sixth form. Fees 15kpa for private sixth form, so in total for both boys to go private for sixth form - 60k. Split the remaining 40k to fund their first year of university.

Option 4 - Stick money into a high interest account (if there is such one atm!) and then 50k for each boy to see them through university. No idea though how much the fees will be though in 15 years time!

I hope this post doesn't come across as boastful, it is not my intention in the slightest for it to do so. I know we are very lucky to have this money and just want it to be spent as it is so wished.

Thank you in advance.

[TheFuckersonInquiry]

[PrettyBelle]

As someone above already pointed out, it is a lovely problem to have.

I would send DSs to private primary, if not from the age of 4, then definitely from 7. I live in the area of very good state schools with people going to great lengths trying to get their DC into them - yet even so their contrast with local private schools is stark.

[CanucksoontobeinLondon]

NotGoodNotBad, even if the OP's boys don't want to go to uni, there's always vocational training.

[NotGoodNotBad]

NotGoodNotBad, even if the OP's boys don't want to go to uni, there's always vocational training.

100k's worth?

[Talkinpeace]

Notgoodbad
Stonemason, Showjumper, Scuba instructor, Stained Glass repairer

[NotGoodNotBad]

I wouldn't think training as a showjumper counts as spending money on education? Likewise, family holidays to Egypt, moving house to a better catchment, and various other things that have been suggested - I don't doubt that travel can be educational, nor that catchment can affect outcomes, but if I'd left money in a will to be spent on education, I wouldn't be expecting it to be spent on holidays or house moves.

Of course we don't know what the will actually says or how the spending of this money will be monitored.

[Talkinpeace]

:-) I was just thinking of eye wateringly expensive 'vocations'

[rabbitstew]

Airline pilot?

[wordfactory]

Well OP, you sint got enough there to put em through private all the way.

So. Why not invest the cash now? I'd get a buy to let (in an area with good capital appreciation). Plough all rental income back into the flat.

Then at 10, see how much you've made. See if it's enough to go private at secondary (as you say the secondary ed is not much cop near you).

[NotGoodNotBad]

Why not invest the cash now? I'd get a buy to let.

Surely this wouldn't be allowed? (I have no experience of will administration but this doesn't sound like it would fly.)

[wordfactory]

It depends on the terms of the trust.

Many will give the trustees power to invest the fund, providing all profit is kept for the purposes of education.

Certainly, if there is no trust, but simply an undertsanding that this cash is for educatiin, then investing it, would be within that spirit, I think.

If I gave a 100k to someone, the last thing I'd want them to do is stick it in a savings account and wait. What a waste!

[Littleredsquirrel]

As a first choice I'd put them into private secondary and supplement with your income.

If that's not an option then I'd probably say some additional tuition for GSCE year, private for A level given that A levels are the most important then the rest for University.

[peking]

Can I be really facetious, and ask if the will specified whether the education had to take place in an establishment?

Education can be through holidays and extra-curricular activities too.

[Talkinpeace]

peking
holidays probably not,
extra curricular most definitely as they fall under the legal definition of education for tax purposes
music, dance, sports, all those sorts of things are well within the remit of such a trust

[losingtrust]

Agree with Talkinpeace. I easily spent a lot on outside music lessons, etc and you could also add languages, private tuition and then leave the rest for uni. If you go fully private you may be forced to work full time when you could stay part-time if you don't go private. My dcs need me a lot even in teenage years.

[losingtrust]

If they don't go to uni vocational training or internship. Probably best way into good jobs especially the media etc.

[mustbeabetterwife]

We're not considering a BTL as an option. I don't feel comfortable 'reinvesting' the money. It's not for us to really choose how to manage that and put it into in a house even if it is with a view to using it later on.
In terms of extra-curricular activities we always intended to fund those ourselves. I suppose now though instead of learning the recorder they could decide to play the harp instead....

[pixelchick10]

I would use the money for secondary education 11 onwards ... they can take out student loans for university

[QuintesKabooom]

You have had lots of good advice already.

In your shoes, I would do the following:

State primary. Ensure your boys are well read and rounded. Museums, trips, etc. Look into tutoring from Y5 to ensure acceptance to independent secondary from 11+. Hopefully your money will have grown a little in a risk free investment by then.

Let them get the uni funding and student loans that they are eligible for. Use the money to pay off the balance, if there is a student loan balance to pay off.

[moonbells]

Get financial advice with aim of putting 100% of the bequest into a unit or investment trust and moving the full ISA limit sideways into an investment ISA for each of you each year to keep dividend payouts clear of tax. There are several school fees companies out there, who will know the most appropriate types of investment. The quicker you do this, the more the fund will appreciate before you need it.

That should net you ~6% growth so you stay ahead of fee increases. Take out some of the funds eg 5% when your first DS goes to school.

Then as others have said, State primary if the ones near you are good. Use the 5% of funds to give them sports, music lessons, trips, tutors if need be. You will know fairly soon whether they are academic, and that will allow decisions to be made about where the rest of the money is used.

However there is also the thought that private primary (at least the three years of pre-prep) may confer a lasting advantage in reading and maths. With boys, this can be crucial.

But if you can, stay state if at all possible - private 6th form may be a good idea though - and also do NOT pay for undergraduate university for reasons others have said. If nothing else, they will learn personal budgeting and the like!

If they are (or one is!) academic, save the relevant portion of the funds for postgraduate study, which is no longer funded in the UK to the level it was, and if they want to get masters degrees, they all have to be self-funded now. No grants left. PhD level is still dependent on subject, but a lot (esp arts) need a large amount of self-funding. Science/medicine less so. I doubt if in 20 years the funding will come back :-/

[mirtzapine]

I would say that you all need to increase your estimation of current annual fees, there are a lot of additional hidden costs, this is my workings based on last academic year spends
We have 2 dd's at prep and pre-prep less 5% sibling discount ~ £15700 pa
Uniforms average out at £350 pa (growth, wear and tear)
Trips average at £600 (I kid you not)
School equipment (pens pencils books etc) £150 (loss and wastage inculded)
Travel to and from school (don't for get that) £500
School Charitable activities (you try telling your DC's your not going to give them a pound each for The Children in need raffle) last year cost us £80 on various charity things.

And it only gets more and more expensive There's a trip next term that's going to cost over £400.

I'm not trying to be a scrooge here but 100K will not get you far at all.

Also you need to factor in annual increase in costs eg a 3% rise year on year.

Frankly, if you start now, by the time they get to 11+ the money will have petered out. Alternatively, if you find a good fund that will manage and grow it over the next 7-10 years for secondary education ( a good call) you may find that the state primary education in your area will not prepare them well enough for Common Entrance Exam, or lay the foundations for the secondary years and your DCs may have difficulty or struggle.

You''l have to face it no matter what, which ever one of the choices you laid out, you will have to top up that 100k

Finally a growth fund for university, you may find that in roughly 20 years time you will have enough for tuition fees.

Whichever choice you make you're going to be damded if you do or damded if you don't.

What I would do if I was in your situation. Find the best pre-prep and prep schools near by. Ones that are feeders for the upper echelon of the private/independant/public school sector. By the time they reach moving on to secondary school, you know that they will easily match and pass the best state school entrance exams. By that point you will know if you want to carry on funding their secondary education at a private school or feel comfortable with the state system knowing they have rock solid foundations. Finally, I would devise a savings plan right now to start to top up the 100k, if I was to elect to go the whole hog in private education up to 18. I have created a spreadsheet with annual cost increments based on what I have experienced over the last few years and I have estimated that to pay for my DD's education to doctoral level I will be laying out nearly £500,000 (I prefer to over estimate dramatically for contingency purposes).

[Talkinpeace]

Private school will eat that money up without much visible gain.

My idea will give you and your kids a lifetime of wonderful memories.

Private school fees have risen at over 5% a year for the last twenty years.
University costs are likely to do the same.
£100k is chicken feed compared with private school fees for two children over the next 20 years.

[Polyethyl]

OP don't joke about playing the harp! My foolish parents let me make that idiot choice when I was 7. I will be encouraging my daughter to choose an instrument she can pick up and carry without help. And which definitely doesn't need two men and an estate car to shift between rehersal and concert hall.

[FormaLurka]

Use the money to pay for DC to take his/her degree at University of Miami/Hawaii/

[Talkinpeace]

Forma
I've told DS he's going to Stanford so I can visit him there