VAT on fees - will your school help current families who are struggling?

[rosegoldtoner]

I know there has been much discussion on here about this, and I really don't wish to ignite a debate about private versus state and if this policy is right or wrong...but I'm curious as to how your schools are intending to support parents who might be unable to cope with the increase on fees?

My DC's school hasn't yet been clear how large a percentage they will add to fees. It is one of the most expensive day schools in London with an extremely strong charitable ethos which is great. There are a number of pupils on full bursaries - the school's policy has always been that they offer 'life changing' bursaries - offering them to pupils that wouldn't otherwise have a chance to attend the school, rather than supporting families in other ways such as through academic scholarships or smaller sibling discounts, for example.

The school are aware that a lot of families are already pushed to the absolute limit - there was a huge parental backlash a few years ago based on the ever increasing fees, and the school have acknowledged in the face of VAT that many parents are extremely worried and might be left unable to continue to send their children to the school.

HOWEVER, the school seems to be continuing on with their existing bursary policy for new pupils coming into the school - whilst at the same time being unclear as to how they will support existing families who are going to struggle. This seems particularly upsetting when many families have been attending the school for many many years (there's a junior school as well) who might have to pull out their kids at crucial exam stages.

Seems to be the very opposite of 'charity begins at home'? What are other schools doing?

As it's one of the most expensive to start with, I seriously doubt families are going to be pushed out by the increase. Normal families can't afford the uniform for private school let alone the fees. Cheaper private schools do have more marginal families, that's kind of different

Can I ask why?

I’m expecting to find out when term starts in September. I know that our school will not pass on the full cost to parents but I also know that they were hoping it wouldn’t happen so quickly or in full. Although we are a big, successful school we don’t have massive margins so it’s going to be difficult. We are still in TPS and threatened strike action to stay in but they may revisit that. We also currently offer IB and A levels so I have a hunch IB might go as that’s expensive to run. I assume that they have made plans for this scenario.

@mitogoshi - I think there are a fair number of very wealthy families who won't remotely have a problem with such an increase. But there are also many families who are struggling to cope - particular;y because fees have essentially doubled in less that a decade.

Even allowing for inflation, a family that joined the lower school in, say, 2014, might have thought that it would be possible to fund their child's whole education at the same school - they might not have been anticipating so many rises and now the VAT, and will find themselves in a very difficult position.

No parent wants to remove their child from a school where they are happy and thriving - and one would hope the school would also feel that.

@misssunshine4040 I think parents have to assess if they can afford something or not. We paid for bursaries via fees. It was not separate although you could pay more if you wanted to. DH and me took part in school marketing and felt we helped in other ways. When bursaries are in the fees, the fees could be lower and VAT accordingly lower to help everyone. It’s not sustainable for lots of families to lean on others like this. The school finances would clearly take an huge hit and realistically, where is the money coming from? Charities, when they are schools, still have to be solvent and pay staff. Parents have to be realistic and choose what they can afford and allow for increases like this.

My DD left boarding school 11 years ago. Fees have not doubled. They are 50.% more. Ok, I know that’s high but it’s not double. You have always needed deep pockets and a rising income. It’s not new. Scraping by isn’t great and too many people do it.

Scraping by isn’t great and too many people do it.

Yes, too many plebs around in private schools, they must know their place.

@Ubertomusic That is clearly not what I meant. Don’t be ridiculous. It is important to plan for 5-7 years at senior school. Not wing it and then ask others to pay. It’s disruptive to DC and upsetting if they have to move. Our family are pretty much plebs. Straw hat makers and farm labourers. Anyone can go to any school but we earned money and paid our way making sure we had contingency funds. Relying on others is not in our DNA and, if we could not (fairly easily) afford it, DDs would have been at state schools just as DH and me were.

Looking back at the fees from our old school ( My last ones left 2022.) the fees have increased by just under 5%. The number of bursaries offered at all stages have reduced and i understand this is to enable all families to not see a huge fee increase. Existing pupils receiving bursaries continue to do so. So the school is carrying on as normal.

It’s a large preprep, prep and senior all through private school. Mainly ( 95% ) boarding pupils once they reach senior school.

My DCs school conducted a survey a few months back, was mostly getting a general idea of how people would afford any increases and if they would stick around for sixth form. Didn’t hear much back after that and then the fees for 24-25 were announced to be increasing by 8%. They’ve increased by 8% 3 years in a row (to cover pension increases). Parents weren’t happy as obviously also looking at VAT, so quite a large group of us wrote to the headteacher and governing body to question the 8% in current climate.

School is a not for profit charity, they offer a number of bursary’s and scholarships. They stuck to their 8% increase and have said they think they need to pass on 15% of the VAT.

The school is increasingly popular in this area (edge of London/Surrey) after being a bit of a back up school for years so I think they feel they’ll still have enough pupils going forwards even if some can’t continue. 29% of kids go to Indy schools here, this is a small school that concentrates more on pastoral than academics and very good SEN support (which is the reason we moved dc from state to Indy for secondary as they got no help whatsoever throughout primary).

School are carrying on as normal, have a large capital building project going on over the summer. I would hope if some students are needing to leave they’d consider them for a bursary and cut back on any future bursary/scholarships for future students.

We would sell our house and move somewhere cheaper if need be to continue paying (dh is a builder so can tackle something falling apart). One dc is already doing GCSEs and younger has an ongoing medical condition / physical disability as well as SEN and is much better supported than they were in state.

Also, there’s a lot of charity fundraising during the year including a harvest festival collection for the local food bank. I’ll be stopping all charity donations to prioritise paying fees, imagine other parents will do the same.

IMO the schools should be looking at what VAT they'll be able to recover on their costs when the rules change. In theory their income won't change as they'd just charge VAT on top of what was the usual fee previously, but in exchange they will be entitled to claim back VAT on their supplies as well.

Obviously their biggest cost is not subject to VAT (staff costs), but VAT on maintenance costs, electricity, etc, etc, will all now be able to be claimed back.

As a result, the profits of a school should ultimately increase if nothing else were to change.

The local private school to me is registered as a charity (not sure I agree with that!), but I would argue that charity status should mean that they should use the savings made from being able to claim VAT, to reduce the fees slightly, rather than build up their own reserves further.

Adding VAT means no more charitable status, therefore indie schools no longer need to provide bursaries. I know of quite a few Indy schools continuing with bursaries and scholarships, which makes no sense at all.
If they do not pass on the full VAT cost this year, they certainly will raise fees much higher in subsequent years to stay afloat. Hence they should be cutting spending now.

Thanks all. Not quite sure why there's a debate emerging about why parents who can afford an increase should support families who can't - that's not the question! It's more about what other schools are doing to support existing families...

Should schools continue with the same number of bursaries for new students, or now set funds aside for existing struggling families? Should they prioritise children entering key exam years? etc etc

Your DD left school 11 years ago, it was very different back then. I don't think it's possible to plan even 1-2 years ahead in the current economic and political climate. Not just schools, but generally too.

Our school is doing it on a case by case basis - if you're struggling go and see them.

We are near the end (sixth form) so this won't affect us too much. However if DC were younger I would be asking what is happening about bursaries since mostly they are paid out of fees and I do think given fee rises and VAT they are unsustainable and I would not be happy to pay high fees for free places.

When you get a bursary there is no guarantee that it will be for the duration of the child's schooling so there is an element of risk, just as there is a risk a parent loses their job/splits up etc and children have to leave.

It is going to be interesting to see how schools handle this.

The interesting point for me though is your mention of "relying on others". Does being on a bursary or scholarship count as "relying on others"? These are the people who "scrape by" and the first casualties of VAT. Should bursaries and scholarships be abolished, so that everyone relies on their own finances only as in the Protestant ethics it's more prudent hence moral?

What breathtaking meaness. Have a word with yourself.

It's all very well people saying 'new children shouldn't get bursaries if existing students parents are in hardship'. Some schools do use fee money for bursaries but others have endowments or charity pots which are tightly ring fenced for bursaries for children who qualify under certain conditions. For those institutions, not offering any new bursaries would not benefit any other parents, just cut off an opportunity for a child who would qualify under those terms.

I do not understand the hysteria around this issue. The Institute for Fiscal Studies estimates that average annual private school fees are £15,200. Adding VAT will increase this to £18,240. Hardly reason for anyone to remove children from a school, surely? If you can afford £15k+ per child then you can probably afford £18k+. (And yes, we know how much people sacrifice etc.)

Similarly, if a school values its parent body, it can offer slightly fewer extras and stop ramping up fees year on year.

?
what does this mean?
who is the comment for?

OP has DC in an expensive London day, they charge in the region of 25-35k so they would need an extra 5-7k per child. Plus annual fees increases.

Before tax a person would have to earn an extra (approx) £6000 a year to pay the additional fees. For one child.
This is not a simple £3000 increase in fees if people are working to pay them.

So it is reasonable to assume there are many people who will struggle with the increase especially when people have more than one child.
There also aren’t that many senior private schools with fees @£15,200. This figure is averaged out by the lower cost of preprep and prep school fees and takes no account of regional variations

OP states concern for those nearing exams, so at senior school.

Our school fees are just over £25k per annum per child so we would be looking at an additional £15k per year should the school pass on the full amount, it's a lot of you have two or more kids depending on circumstances. I agree though 2 or 3k extra for one child in a cheaper school isn't much difference. Most schools around here at at least 20 per year though.

It won't affect us much, we have already paid our kids fees until all three finish 6th form. We will just have to pay whatever VAT increase to that is due.

Some schools do use fee money for bursaries but others have endowments or charity pots which are tightly ring fenced for bursaries for children who qualify under certain conditions. For those institutions, not offering any new bursaries would not benefit any other parents, just cut off an opportunity for a child who would qualify under those terms

This and the dc I know with bursaries are very very bright, which is a good thing for the school.

OP has DC in an expensive London day, they charge in the region of 25-35k so they would need an extra 5-7k per child. Plus annual fees increases.

If you can afford 30k plus annual fee increases then I don’t see how another 7k makes it unaffordable but then I don’t know anyone paying 30k a year simply because they camp and don’t have sky!