School fees upfront question

[MrsGuyOfGisbourne]

Does anyone have any experience of schmes for geting a discount by paying, say two or three years fees upfront? The school DS is about to go to has a scheme like that - they do not quote a specific reduction - ie x% off, but get a specific quote and it is 'based on gilt price' at that specific time.
I would like to do this, becuase a lump I then forget about is less painful than a regular direct debit - would be interested to hear if anyone has done this and any views?

I would love to do this but don't have the funds so it's a termly struggle atm. Watching with interest to see exactly what the savings might be, because, as you say, they're always quite vague about this.

I'm sure there was an article about this recently. Will ask DH when he gets in and post a link if possible.

don't forget to check the discount against what you could get in Bonds / high interest savings across the same time frame (there's a 10% deal atm)

I'm also interested, am aware of their existence but don't know how they work. The advantage should be that the school can invest the money and get income free of tax. I guess questions to ask are: what happens if the child leaves the school for some unanticipated reason, how safe is your money, does it protect you against fee increases?

If you are sitting on a cash mountain, then the interest you earn is taxable (unless in ISA etc). Hence by paying fees early, you save tax on the interst you would have earned on that cash. This may be at higher rate depnding on the rest of your income.

roquefort - yes that is exactly what I am interested in. According to the blurb ( have not yet seen small rpint, assume that comes with the quote) you can transfer it to another fee-paying school if he moves, and at the governeors discretion it can be pro-rata repaid if he leaves for another unspecified reason (a boy was expelled recerly for hacking into the computer containing the papers for the scholarship exam, presume they would have balked at refunding for him ).
Also, am only interested if it acts as a 'hedge' against future increases to some extent, as I can see that school fees are likley to rise by a lot more than the headline inflation rate over the next few years, and certainly more than my salary is likely to rise.

CITH - yes -on the basis that interest is about 5% - when taxed it is only 3%, so that is part of my rationale as savings oth taxed interest is effectively losing moeny in the current inflationary economy. have seen 10% offered for the over 50s - not quite there yet and looking at longer term bonds, but I am crapa t noticing when they mature and so emotioanlly would rather just stash it in the school so I dont have to think aboutit...
Will report back when I get the quotes...

Where is the 10% deal please Twig?

ahhh I think it's a regular saver with capped deposits now I come to think about it

but I'd check the markets first before committing

You need to know that actual cost before you make a decision.

We just pay monthly and don't get discounts. We do have savings so perhaps could pay for a 2 or 3 years, but we are also offsetting mortgage interest so would need to understand the plusses and minuses.

One of the schools near us does it - you pay the current rate of fees for the next 4 or 10 years, so effectively save on all the fee rises as well as the tax thing mentioned above. Not offered as an option at our boys school, nor could we have afforded it but think financially it would be worthwhile.

Have just had the quotations - amoiunts to 4% of current fee if 2 years upfront, 7% off current if 3 yrs upfront. As schools fees are likely to rise by more than inflation, and the tax I pay on savings is draconian, seems like a reasonable deal?

Does anyone know how much percentage -wise school fees have risen over recent years? i know the past is no prediction of the future, but it appears that they do rise faster than general inflation. Any input very welcome!

You usually allow up to 10% per year(last year 5%, this 8% lfl iirc) and don't forget they increase anyway as dc progress up the school.

Yes, we have done it for 3dcs and the discount is not huge but it all helps. The more planning you do, the bigger the discount I think. It allows for 5% inflation and extras still get billed on top. the main advantage is that having done it we don't get such a regular hit on our monthly.yearly income as before.