Private school - what percentage of salary do you spend

[cluelessnewmum]

Am currently trying to work out whether we can afford private school without making our lives a misery.

We're lucky that for 1-2 dc we would be OK with fees. However, I'd ideally love to have a third dc, and the fees might be pushing it for 3...

If your dc are in private school, roughly what percentage of your take home household salary are you spending on fees?

Obviously will vary depending on your location, number of DCs etc but I'm trying to gauge when it starts to become a financially stupid thing to do, acknowledging everyone's outgoings are different too. But useful to get a yardstick from others.

Thanks for your help!

13%. I just enrolled him and figured out how to pay it afterwards. 😉

Ok so school fees alone were 12% but when you factor in DSS maintenance as well that cost was nearer 23%.

As a pp said % of bet is a red herring as as a few pp have said they don't have a mortgage.

In our situation no mortgage would make a huge difference to how rich we feel.

All.i would say is it's like a snowball in that it just grows and grows. So in the 4 years that DS was at his prep school the fees increased by 500 a term which is over 100 a month extra per child.

Secondary is a generally a huge cost jump. Add to that the sport trip and the ski trip which they do and it can be eye watering.

If your dc are young a good thing would be to budget for it for the next 6 months at least and live as it you were paying the fees already. Put the money in savings and see how you feel. Save the money for 3 sets.pf fees and.see.how.comfortable it is.

All I can say OP is that it is a really individual decision. I know people who are loaded and send their DC to our private school and others who are really struggling and go without everything to send them. I think a lot depends on what you spend your money on monthly. Many of my DC's friends seem middle of the road in terms of wealth and I wonder how on earth they pay the fees. Then I go to their houses and see that they don't have all the latest gadgets, don't have a flashy car and always stay in the UK for holidays.

You may want to send them private for some of the time, either primary or secondary to reduce the cost. Once at secondary though it is more like £15K a year per child.

At the moment we spend £26K a year on school fees which is quite a big chunk of our income but we don't have a mortgage or any other debt.

Thanks all for your replies, it is very useful to get so many perspectives.

I did redo my fees spreadsheet to account for a 3.5% fee increase (our front runner school said that if fees increase that's been the amount but they haven't increased every year). To be honest I think the schools in my area would price themselves out the market if they did that every year as the fee increase is of course compound.

I looked at secondary school fees as well and added on a 3.5% fee increase but that was the equivalent of yearly school fees being £29k (ie almost double) in 8 years, which I think most people wouldn't be able to pay. I don't get the impression that most other parents are on massive city type salaries, more medics, estate agents, vets, local businesses for instance.

I can't predict the future both for our earning power or fee increases, all I can go on is at the moment we can afford it without too much sacrifice for 3 kids....

Just out of interest, those who send dc to private school what do you earn? And how much are the school fees?

varies where you are in the country - SE anything from £5k upwards per term, less in other parts of the country.

If you're looking at reducing outgoings, think carefully before overpaying mortgage. Depends on your own situation, but we earn a much better rate of interest on savings than we pay on mortgage, so makes no sense to overpay.

gosh lapin that is very unusual!

Probably investments rather than savings?

25% of household net income for two children in lower school years.

It's tight. There isn't much left for holidays, car upgrades, home improvements etc. There probably won't be going to private senior schools. Not without considerable scholarships.

33% of our net income. No mortgage otherwise would be impossible. Have used savings to pay for hols etc.

I agree with other posters that % of income is not a reliable indicator. You need a detailed cash flow projection, preferably with formulas factored in so you can flex the projection to worst case scenarios. My DD has just started Reception and last year when looking around schools I did a big exercise on this up to the age of DD2 finishing senior school in 2033 (gulp!). Factors which I included were:

1. Starting school fees per year and then increase by 4% a year, including projecting what senior school fees will be in 7 years time with a 4% increase on today's senior fees.

1. You need a realistic cost of living cost (I prepared a boring spreadsheet which compared what I thought it was against actual expenditure for the past 12 months as a check). I've then assumed 3% inflation each year for cost of living.

1. Other childcare costs (we have a nanny for DD2 and then after school/holiday care once she is at school). Inflation at 1% or 2% for these costs.

1. Mortgage repayments

1. Likely salary increases or bonuses (but on the prudent side so we only included 1%)

1. Savings and investments, income streams and projections in which years we might sell investments to pay the fees if income does not cover expenses.

Estimated total school fees for DD1 are £267k and £300k for DD2. And then I found out it was another £225 a term for lunch! Plus does not include uniform, extras etc. Current reception school fees for our SE London day school are £4,260 a term plus the lunch amounts. This is cheaper thankfully than the super-selective private school down the road (and I preferred our junior school enormously to the super-selective one).

I also agree with Lapin on potentially keeping the mortgage rather than paying down to reduce outgoings - I have investments equal to our mortgage but these are increasing annually at a much greater rate then our 1.3% mortgage plus provide an income to help pay the fees. We're renewing every two years at the moment.

It might be worth you seeing an IFA - they have great computer programs which will calculate the cash flow projections rather than doing it yourself.

Both savings and investments. Mortgage is in two parts, mostly lifetime tracker, currently 0.5% (I know ) and part fixed at around 3%. Investments have exceeded this (obv risk involved) while First Direct regular saver pays 5% on max of £300 saved per month. Of course all circs are different, I'm just saying it's not always right to pay off debts as priorities. The Money Saving Expert guy has some brilliant info on this.

Yes, you should assume hefty fee increases.

IMO unless mortgage free you need a household income of over £200k to afford 3 lots of fees.

Discounts are rare at primary age and (in the south east at least) are for the most academic/talented DC at secondary.

Also, don't forget that a sizeable number of people have help from GPs with fees.

Also, unless you have free help from relatives or are a teacher, childcare for 18 weeks’ holiday ain’t cheap!

IMO almost all the families at our DCs’ prep schools seem very wealthy indeed (houses, cars, holidays, man earning £££ and SAHM), or have GPs paying or contributing to fees. About 30%-40% with both parents WoH. I find it laughable when MNetters using private schools talk about families of “ordinary”means. We’re lucky to be wealthy (for now anyway!) but are not by comparison with most others at the schools.

I mean when they talk about “ordinary” families using private schools. The costs are v v high relative to average or even “high” incomes.

I think you're unfortunately being a little naive about the annual increases. Certainly here in the East Mids (not a wealthy area) we see 3-4% increases every single year without fail. We also don't have any sibling discounts and whilst there are scholarships they are only for a limited time and they are small eg the music scholar has a one half discount from their music tuition. The assistance goes on bursaries and they are for disadvantaged children who are academically very gifted rather than for families that can't quite afford it.

You'd perhaps be surprised how much some people earn and also perhaps surprised at the number of people who have help from grandparents.

In my immediate circle of five friends there is only one larger family (3 children) and they have grandparents paying for 2 children. Another family also has grandparents paying for one of theirs. Everyone else has two children or one child and in all but one case two high paying professional jobs (mainly medics, lawyers, business owners). Most seem to have a household income of at least £175k.

Our fees are about £34k (two DC).

I agree with newtsuitcase. I know very few in my area (SE) who are planning to go independent at secondary, esp with 2 or 3 children, because the fees are just too high. And these are often the type of family who 20 years ago would very likely have gone private (dad earning lots in the city, SAHM). But fees are so high now that it's unaffordable for most, and if you read the press, a lot of places at the pricier independents are now taken by international students. For us, we have dual income (one moderate and mine paltry!), and are only able to even consider independent because of extremely generous staff discount plus additional help from GPs. And we haven't finally decided yet, as it will still be a sizeable financial commitment.

Thanks for all your interesting insights.

badgerface it sounds like you were very thorough! Did you work out fee increases as a compound figure (4% including last year's 4% rise)?

As mentioned when I did that compound £16.5k fees became £29k fees within 8 years, which in my opinion isn't a sustainable increase (for those of you who have dc in prep school are you factoring fees bring double by the time your kid reaches secondary?)?

I may well be being naive newsuitcase! maybe they will be that bad, in which case I think alot of people won't be able to afford it who can now in a decade.

If that becomes the case I think I'd just have to think oh well at least they got a good primary education. As a family £29k (and rising + other costs) fees would not be possible and not worth it in my opinion.

Out of interest newsuitcase are the 3-4% increases compound or just from the amount you were originally paying, as it makes a big difference to the end figure when you're working it out?

Re GP help, we'd only get a little bit of financial help from inlaws, not enough to sway it either way (maybe 20-25% so obviously still helpful!). Main help from my parents is in childcare for after school and holidays.

Looptiles interesting re £200k, do you think that as gross or net household income?

FWIW I've just had a look at the information provided by the school we're looking at about its Fees in Advance scheme, and for the purposes of that scheme it assumes fee increases of 4% compound.

Lapin OK thanks (gulp!). Haven't heard of Fees in Advance so I don't know if schools round here do it. Do you get a discount for paying in advance?

The increases are compound yes. So each year you are looking at 3-4% increases. There's a reasonable jump in fees at senior level too.

Fees are now paid termly in advance due to changes in the consumer credit legislation. Some parents buy school fee insurance plans to enable them to cover this. Its a fairly new development and certainly our school only introduced it this term since they were a bit behind in their knowledge of the law. Unsurprisingly there are now a fair few parents saying it isn't sustainable since they were already scraping by and now they have had to hand over 4 month's fees at once.

Its a tricky decision if you think you are borderline in your ability to afford it. Personally I wouldn't. We have a very high joint income of over £300k and it still puts pressure on us.