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?

The school my children are at are considering two things;

1 - Bursaries being redistributed amongst existing students (i.e. no new starters get it, even at year 7).

2 - Asking 'Old Girls' if they are willing to have their donations re-directed to help the children entering Years 11 and Years 13 who, due to exams, really need to stay at their existing school.

Many of the 'Old Girls' give money anyway to help with various new projects (updated swimming pool, new gym etc), so it's just a case of asking them if they are happy for their money to be directed to the 'bursary pot' instead (although, of course, not that simple but at least they are trying to find a solution).

Yet many people on all salaries are struggling to pay increases in food costs, mortgages etc.
An increase over and above the amount someone would reasonably budget for year on year will impact them.
If everyone can easily take on board such unexpected increases without salaries naturally also increasing why is there so much talk of poverty.

Just because someone has the means to afford to pay school fees does not mean they have the means to afford huge fee increases above and beyond the normal. This is no different from the affordability of an above and beyond increase in mortgages and food.

Yet many people on all salaries are struggling to pay increases in food costs, mortgages etc.

Of course because most people don’t have net 30k spare just for school fees…I wouldn’t put those people in the same category as those facing poverty because of COL..

As I said the people I know paying 30k for schools do have room in their budget as they go on holiday, have home improvements, hobbies etc. Now the VAT might mean a cheaper holiday but that imo doesn’t make it unaffordable.

Highgate largely funds bursaries by renting out the properties that they used to allow staff to live in, rather than from current fee-payers.

yes - my kids schools, also N London day schools not far from Highgate, have been very clear that they want to hear from people struggling.

It has for over a decade been the case that private fees will double between reception and year 13, just from the annual fee inflation.

You are completely off the question of the OP.

Everyone in the country who has enough money themselves, including many of those at state schools, could donate to food banks. Food bank supplying is not something particularly owed by parents finding it difficult to pay an extra 20% in school fees.

Parents at private schools are already donating the money that would have been spent on their child back into the common pool.

Many people paying 15- 30k on school fees would be right to be suspicious that they are probably going to be called on to fill Rachel Reeves ‘ black hole’ and will be subject to other tax increases after the budget. Even those with the broadest shoulders do not have access to a magic money tree .

Thanks for all the responses. I don't think there's much point in debating how easy it will be for parents to manage ,or not - it's pretty clear that if you have two or three kids at a school that charges 30k a year, and you have already been stretched by higher than expected annual fee increases, whacking on an extra 14 or 21k to your annual (already huge) outgoings might be too much for some...

Obviously if you are paying 60 or 90k a year on fees already then you are a high earner or have huge savings - but there are financial limits for most families, even if they are in this bracket. Not everyone gets banker-level bonuses...

My question is, what are schools doing to support families who find themselves in this position?

@Cheeseburger27 When a school is not for profit, it doesn’t mean they don’t borrow for capital projects. They need to factor in repayments in fees and also how any gift income or investment income can be used for projects or bursaries.

Often girls’ schools have fewer endowments because, sadly, women 150 years ago didn’t work and didn’t have their own money. Unless they can get lots of old girls contributing, money can be tight. It’s much more difficult to fund bursaries too. However they do sometimes sell off land and other assets for money.

I think that when each family has more than one set of school fees to pay, they will notice increased fees. They are possibly going to have much higher mortgage costs and other expenses too. However others won’t be able to take up the slack for all who cannot continue. It is not up to others to pay more but each school should inform parents of strategies and policies.

This is what voting for Labour meant. Such policies impact on dc.

OP just be aware that in lots of circumstances the money used for burseries cannot legally be redistributed in other ways, many have set criteria for its use that wouldn’t apply to helping offset fees for existing non-bursery places.

Accept you don’t know anyone who may struggle but that’s irrelevant. I’m sure many on here including myself could say they know of many who won’t be able to afford the increase and already forgo holidays of all kinds.

Families budget for their outgoings ( the super rich not so much maybe ) if these outgoing increase then they will be affected.
The example of food and mortgage increases is relevant as we all have a ceiling on what we can afford. If that ceiling increases much more than would be expected then people and children will suffer. Especially those who are nearing exam years as OP states a concern for.

@rosegoldtoner - the answer is quite simple. For a school with an existing bursary scheme, those falling on hardship need to apply asap via the bursar and will undergo financial assessment, if there are still unallocated funds. It happened during Covid too, for example.
Then the second question more generally is if the school wants to change strategy and aim to keep base fees lower for all going forward by cutting costs etc or reintroducing eg sibling discounts.

If the academic powerhouses don’t react and lose a lot of more middle class children, academic standards will decline. They can’t operate with just super rich and bright poorer children. It will become even more anomalous than it already is. So that is a fact they have to face head on. They will also have to consider carefully that a lot of middle class doctor types are too proud to beg for help so I think they are going to have to cost cut. I think some may also try and shed charitable status if it is only going to cost them money and yield zero benefit, but exactly how that will work legally speaking I have no idea.

Just another comment. If a parent has their own company (or even a helpful employer), the school fees can be paid through a trading company and (assuming there's no sort of exclusion put in place), the VAT reclaimed through the company.

If the contract with the school is with the employing company, the cost of the fees (including VAT) is included on a P11D form for the employee so they will pay income tax (but not National Insurance) on this. The employing company would pay e'ers NI, but they would do if they gave the same amount as a salary anyway.

If you were to negotiate a salary reduction for the value of the school fees, it would save you the employee's NIC on it, without costing the company any more.

Not a huge saving, but it's a saving, nonetheless.

Wow.

I'm all for the VAT increase. However I do feel sorry for the kids who are going into years 11 and 13. If I was a head I would try and support those in some way just for this year. However I bet this issue (of unaffordability) must happen often down to individual circumstance so I guess it could depend on how they are treated normally.

If the academic powerhouses don’t react and lose a lot of more middle class children, academic standards will decline. They can’t operate with just super rich and bright poorer children. It will become even more anomalous than it already is. So that is a fact they have to face head on. They will also have to consider carefully that a lot of middle class doctor types are too proud to beg for help so I think they are going to have to cost cut.

That's exactly what has already happened in our case - two talented and two academically bright middle class kids are leaving because the families cannot afford VAT and the school is becoming more "elitist" so to speak - in terms of money, not necessarily academic ability/talent.
Also spot on re. demography.

@Araminta1003 - you are so right. Several very bright kids at my DCs school will be leaving at sixth form stage for the super-selective grammars - though I think it will take a while for academic standards to significantly decline. Long term, though, they absolutely will - though I don't get the impressions the schools are thinking that far ahead!

I wouldn't expect one of London's most expensive schools to care much about that.
It can't be news to parents that fees are raising and if finances are difficult you have toprioritize. There are excellent free state schools in London.

@PfishFood - interesting, have never seen this suggested and there's a very active parent body trying to suggest ways to make the VAT more manageable. I guess most don't have their own companies though!

@Moonshiners - I wonder if any schools are already planning to support those going into exam years? Does anyone know?

@MumChp - there's been a huge lack of clarity on both when this would happen and what the school will do about it. Parents still do not know exactly how much the fees will go up by next year.

On another note, does anyone know if the school has already published fees for the whole 24/25 academic year, are they legally bound to stick to those stated fees?

also @MumChp - yes there are excellent state schools in London but certainly until sixth form stage, they are all full.

They can stick to the published fees and then add the full 20% of vat on top

To answer OPs question, I would say it seems ours are confident that the school is in high enough demand, with waiting lists for each year group, that it feels very much like "my way or the highway".
No parent consultation, nor offers of help. They have said they can't absorb any. We aren't a famous, expensive public school. Many of our parents are working professionals and I know lots of families who have either given notice or haven't joined. We're considering our options as DS has extra needs. We have 2 DC and as others have said, it isn't a case of a few grand more a year. The extra income needed to cover 2 DCs is a much higher figure. That's on top of the 10% increases we have faced for the last few years.
I'm relieved my DC aren't in exam years. I'd hope schools would plan for support for these children.

In response to some comments, even with the greatest of foresight and planning, so many children will now be faced with being uprooted, separated from their friends and experiencing huge change from all they have known - many of them with extra needs, like my DS, who will struggle immensely.

I do think your school should let people know asap about the plan for January so that people can make appropriate plans. Some people with students going into eg y12 may want to move them (and suck up the notice period), and that may be trickier after GCSE results day.

I have a friend who teaches in a private school and I know that they are trying to support existing students to stay in y11 and y13, and will likely offer less bursaries to new joiners because of this. That said, even an individual full bursary doesn't really go that far stretched between 10+ students. However they do have some specific scholarships which can only go to pupils who do a certain sport (which the school is known for) and that will not change.

I also know the sixth form at the (state) school where I teach has received some late applications for y12 as well as some parents trying to move for y13. Unfortunately we don't accept y13 joiners.

One thing I do think is that parents should seriously budget for fee increases when choosing private schools - I know previously the advice was about 5% a year but given the way costs including staffing costs are rising, I would say 10%+ is more sensible. I do think for the last few years too many parents have been crossing their fingers and hoping for the best rather than making sensible future plans. There has been a lot of strain on school running costs in the last few years and apart from very rich schools, I can see that schools can't really afford to absorb more increases.

If a building project is already started, contracts involved usually means the school can't pull out part way through.

You will get a school place for your child like all the other children if you can't pay for fees at one of the most expensive schools in London. My guess is only a few students (if any) will change to state at your child's school. But all parents with children in private schools seem to be poor these days.

“On another note, does anyone know if the school has already published fees for the whole 24/25 academic year, are they legally bound to stick to those stated fees?”

Most have announced set fees for the next academic year last term but included a new term in theirs terms and conditions enabling them to charge VAT on top of that, if that is the law. The standard terms and conditions many buy in were updated to that effect months ago. This allows them to charge the VAT half way through the year. Any professionally run private school will have already done this.