Private School fees - how do you manage?

[Moneymoneymoneyitssofunny]

Considering private option for DCs (in next few years) but just curious as to how people manage their finances to ensure that school fees are paid for duration of schooling. Paying out of earned income alone seems risky to me in case of unexpected redundancy etc but we have no source of help from grandparents or other, just modest savings, so tell me - what do other MNers do? Remortgage property?save up in advance? have other source of finance such as family members to help? Use specialist financial planners who deal with school fee planning? I'd be interested to get some advice/ideas.

No judgement from me. She's a friend and stressed to high heaven.

I get that she wants her DDs to have a good education but they just don't have the money ( and too many kids too late).

University years have become incredibly expensive. Parents are under pressure to stay living (or even move to) locations that will provide a suitable base for launching careers (internships etc) with lots of bedrooms and bathrooms, while funding their DCs' studies. Plus student DC eat incredible quantities of food and like offering B&B accommodation to all their new found friends during long holidays.

This has been an interesting eye-opener. I didn't realise so many people forward planning for private education.

We can afford it from our regular income, for now. But we're only just starting pre-prep. We're basically winging it from here that we'll be able to earn enough going forward.

Reading all this, I think we'll be ploughing money in to a trust fund for the kids' education, before we start paying in to pensions. Is that mad?

State primaries for both DC and saving/investing from birth. Both have CTF's which are targeted for their uni education costs. We also have an offset mortgage (for the flexibility) which will definitely come in handy.

We plan to fund secondary school fees from income for the first 3 years (currently £15kpa) after which we have 2 sets of school fees to pay which we will fund partially from a combination of income, bonuses and savings.

Cooki - again, the financial trade-off between pensions and DCs education is a very real one. I think it helps to get good financial advice and to keep an ongoing close eye on the interest rate and taxation implications of decisions.

Anyone having DC now will expect to incur significant university costs. That was not the case for parents whose DC are currently at university. Clearly, parents will need to think about education costs for some 22 years, with big hard to avoid costs (childcare, university) at either end and potentially avoidable school fees in the middle.

Children are ever more expensive...

Cooki
I agree with Bonsoir that good advice is necessary. One option might be for you both to try to save as close to your ISA allowance as possible for a couple of years. You would have a good lump sum if a crisis hit and tax free earnings. If you don't need it for school fees i.e. if you continue to meet them through income, you have a pot of cash towards your retirement.

Don't adults (18+) going to university get a student loan?

That's what I'm planning on telling my DCs they need to do.

Obviously I wouldn't see them struggle - I'd enjoy sending grocery deliveries and making sure they've got decent shoes and coats etc.

But, I think at that age they should be thinking for themselves about the ROI of going to university and generally learning to take responsibility for their own life choices.

This is another thread altogether though!

Thanks Chaz and Bonsoir. We've got a very good financial adviser - I should just ask him. I guess the answer is a bit of both - some in trust fund, some in pensions. The tax benefits of paying in to a pension direct from our own business is not one to be ignored.

Many parents won't want their DC to start adult life encumbered with student debt. It is, if humanly possible, best avoided.

cooki it also depends very much what your earned income is - we've very munched adopted the "wing it approach" and so far so good

Both DH and I work and we could cover all our outgoings on one salary, so although we don't have a "school fund" I am comfortable that our position is manageable. Let's face it no one is ploughing 50k+ a year into school fees and leaving other areas untouched (savings, pensions, mortgage reduction) so worst case scenario there are a number of fall backs and if we lost everything....then I'm sure the private school would be least of our concerns

I'm glad it's not just us, Past.

Bonsoir DH and I slogged through our early adult life without the benefit of private education, university education, financial help or indeed any parental guidance at all. And we've done well. Hence our attitudes on our DC making their own way at 18. That may well change when the time arrives though!

2 in prep school and we pay out of earned income. Income Only allows us to save enough for one term in advance, with an amount being out aside each month. Prob have head in sand re income but DH has own business and currently we are lucky enough to just about afford it.
No help from other parties, no flash hols etc but given our DCs needs we were convinced that this took priority over other areas.

At the start of this thread clobbered suggests that some independents are happy to enter into arrangements with cash strapped parents on the basis that they are better off keeping you and getting "some money". IME this might well have been true before 2008 but is increasingly less likely to be the case. Independents have had to clean up their act and make sure that any extra money (viz any discount you might have got on your fees as a fee paying parent fallen on hard tines ten years ago) is now competed for fairly - ie against external means-tested applicants - and bursary winners tend to be very bright indeed. There are so many more applicants as times get harder that your child will need to be extremely clever to win one - even if you have been paying fees at the school for years. I've seen quite a few families whose children have had to leave because they could no longer pay. And it is also tough on your DC too if they are close friends.

Cookie3 I used to share your view about them standing on their own two feet at 18 but be ready for the shock when you discover how low the maximum maintenance loan for living costs actually is - in many cases it will not even cover their housing. Any difference has to come from your pocket unless you are happy for your DC to live at home and go to their local uni. Someone posted this useful link recently on the HE thread - be warned! m.bbc.co.uk/news/education-31028467

Fees come out of income, I work part time and my DH full time in pretty well paid positions, mind you we only have to fund 1DC! We have a safety net in so much as we were lucky to made money from the property market and investments over the years so if we both lost our jobs we have savings of around three times our gross annual income. We have 3 more years of school to fund and then university costs but we will expect DD to contribute towards those costs, need to investigate the in's and out's of the student loan system.

In my experience most of DD's friends are funding out of income with the occasional grandparent contribution via inheritance in advance. At my DD's school those who fall on hard times can look to a maximum of 2 years deferral on fees, quite rightly the Bursar makes any applicants jump through hoops to prove they can't raise funds via equity release or selling assets.

The maintainance loan for university is calculated on the parents' income.

Many/most (students) don't receive enough in loans to cover their accommodation, let alone their living expenses.

Parents are expected to top up!

Savings from previous income.
Would not have seen them to the independent school unless we had the full amount to see them through (coming from impoverished working class background where 'credit' and 'debt' were dirty words)

We pay from earned income. Fees are currently a bit less than 1/3 of our earned income. We have sufficient savings to cover 2.5 years of fees should one of us be made redundant, and life insurance (8x salary) via our pension schemes at work. I expect my income to increase faster than school fees (I'm highly qualified and there is a lot of demand for people with my specialist qualifications).

Another one sort of winging it!

£240k in Offset Mortgage savings account for school fees for 2 at secondary.
It won't be enough by about £50k so looking to top up from income and also put bonuses into pension.

Set to do DS1 5 years / DS2 7 years if they stay on for sixth form.

I find the stress quite motivating to do well at work!!

Interested in the Uni funding. I assumed they would get a loan forvthevtuition fees part. Can you get a loan for the living costs too or is that assessed on parents income? Living costs obviously would vary depending on location and lifestyle. But apart from the tuition fees, which are not repayable until earning a decent salary, is it so different now to 20 years ago? Or am I jopelessly out of touch and naive? I'd happily help towards loan repayments etc but have not really factored in Uni costs as a big thing.

Citymum we aren't near it yet but those who are there now say that uni costs are crippling. Loans cover tuition. Bank of mum and dad typically pays the other 12 - 15 grand in living costs

All students get the full loan did tuition fees.

The maitainsnce loan for living costs is calculated using the parents income. Often this loan doesn't cover accommodation let alone living expenses.

Pp

Accommodation costs vary.

Halls of residence in some universities is notoriously expensive.

And they vary wildly from 3k per year to nearly 7k per year.

How much a parent gives to live varies wildly too .

A loan for student fees is what I was expecting the dcs to get. I don't mind paying for them to live! If things are tight they can get holiday work to help towards rent costs. But I would certainly hope we'd be able to feed and clothe them.

In my head we'll be buying investment houses for them and some friends to live in. Charging the friends rent.

Although my 4yo tells me she's going to Cambridge because that's the closest place to home where she can study space, so she'll be in halls!!

This has been such an interesting response and thank you everyone for your comments. In my head I had always thought it better to invest in education from late prep stage (when children seem to be so receptive to encouragement, or ready to be put off school in the wrong setting, given a love of learning and subject matter, a thorough education to form a basis for future study etc and to ensure no learning issues go undetected), rather than hold onto cash for only competitive senior school (which they may not get into without investment in earlier years) or university (too far into the future - and they will have to support themselves by then as much as possible!). By university stage we will also be retirement age, and possible broke.

Cooki3 - you mention trust funds. Can you tell me a bit more about these - how do you set them up, costs of doing so etc and also what is the tax advantage of using trusts? Also where did you find a good financial advisor? I'm not sure how to find a reputable one.

Does anyone have any experience of these specialists school fee plans that get advertised on school websites? I have only investigated one and that was basically a remortgage of the family house option, which we would not be keen to do given our ages.

Any more advice gratefully received!

We have two at uni. We pay their halls fees/rent and their travel home. DD1 is going to Russia for a month in June and we're paying for that too (£1,400) otherwise she couldn't go.

Their tuition loans pay for their education and their maintenance loans (£4-5k) covers their living expenses, any costs associated with their courses and travel while they're away.