Advice for parents

Planning the fees

Covered here:

 When are fees paid?
 What do fees cover?
 What about fee increases?
 How do parents go about planning for the future?
 Can parents get assistance with the fees?
 Can I get a discount for more than one child?
 What if I run into difficulties with the fees?
 Glossary

Early financial planning can give your child the advantage of the holistic education on offer at independent schools, as Nicholas Marten explains

Rarely has the issue of planning for school fees been so critical for parents. With the global credit crisis biting, shrewd parents are happily secure in the knowledge that the education of their children is protected. But whilst there are many parents who have planned well in advance for their children’s education, the issue of fees is a surprisingly low priority for many others, and the realisation of the problem only hits them when the first fee bill hits the doormat.

As a Bursar, I am always surprised at the number of parents I see who have given little (or in some cases, no) thought to the payment of fees. Fortunately most are able to meet their commitments but some struggle considerably. In the last year, it has been more difficult for some parents to find the fees, due to a combination of employment worries, rising costs and reduced equity/ability to borrow against their properties. I am always wary of the parent who is late with the first term’s fee for their child – it does not bode well!

There are currently approximately 628,000 children being educated in around 2,600 independent schools in the UK, of which over 500,000 are educated in the 1,265 schools in membership of the Independent Schools Council (source: ISC Annual Census 2009). Of the pupils at ISC-member schools, around 68,000 are boarders. The average termly boarding fees at ISC-member schools in January 2009 were £7,748 and the average fees for a day pupil at an ISC-member boarding school were £4,511. That equates to in excess of £160,000 for a pupil’s senior boarding school education.

While the school fees may seem high, it should be remembered that they cover a great deal in addition to the provision of a first-class education in small classes; the 2009 ISC Census shows a teacher/pupil ratio of 1 to 9.5, and such favourable ratios do come at a price. Parents need to offset the fees against what they would have to provide if the child were not at that school, especially if they are boarding. For example, busy working parents may not be in a position to chauffeur their offspring to rugby coaching, music or dance lessons, whereas all these, and many other activities, can take place at the school in a thriving environment.

When are fees paid?
The school will send the fee invoice before the beginning of each term (in the summer they are often sent up to six weeks before term starts), and the fees should be paid in full on or before the first day of each term. Whilst schools increasingly offer a variety of payment methods, ranging from lump-sum payments to monthly direct debit, many are now insisting on the payment of fees by direct debit only.

The majority of schools require at least one term’s notice of withdrawal of a child and, if this is not given, a further term’s fees in lieu will be payable. Whilst appearing to be tough, it should be remembered that it is not always easy for a school to fill a place at the last minute.

What do fees cover?
Fees usually include tuition, many recreational activities, accommodation and food (in boarding schools and many day schools). They may also include basic laundry and textbooks, but uniforms will not usually be included. School uniform can cost thousands of pounds over the course of a child’s education, particularly if the uniform is unusual, such as top hat and tails, as is the case in a number of independent schools.

Parents are often surprised at the amount of additional charges that can appear on the bill (in most cases after the event), but these extras will be agreed in advance with parents or an upper limit agreed, for example for pocket money. It is always worth checking the extras on the fee bill to make sure that you are agree with them. Likely extras could be private music lessons, computer purchase, horse-riding, dry cleaning and outings such as theatre trips. Parents should ask their school for an indication of average termly extras to assist in their planning.

What about fee increases?
Schools are very conscious of the cost of education to their parents, but in most cases there will be an annual fee increase. This is usually imposed at the start of each academic year and schools try to give parents as much notice as possible of a fee rise. In recent years, fee increases have been in the region of 5–6%, although they do vary from school to school and some indications are that in the current climate fee increases in 2009/10 may be lower than the average quoted above. Whereas increases are often greater than inflation, schools are faced with many factors when planning their annual budgets. Schools are labour-intensive organisations, with around 60–70% of costs directly attributable to staffing. They have also been hit recently by large increases in utility and food costs. Schools as charities aim to make small surpluses to reinvest in the establishment and the efficient management of resources is a key role of the school’s Bursar. Last year, independent schools in membership of the ISC spent nearly £800m on capital developments, equating to £1,550 per pupil. It is therefore very important that parents plan for inflation in school fees for future years.

How do parents go about planning for the future?
Parents who wish to provide an independent education for their children need to start planning and, more importantly, saving as early as possible. Although the economy at the time of writing is very flat, investment plans will usually benefit from long-term exposure to the equity market, although the value of such investments can go up or down. Some brokers recommend drip-feeding money into an investment to minimise the effects of the peaks and troughs over a longer period.

The Individual Savings Account (ISA) is a useful tax-free scheme, with the current limit increased in 2009 to £10,200. Both parents can participate in an ISA, so it is possible to invest £20,400 a year tax-free in two maxi ISAs and a useful fund can be accumulated prior to the child starting his or her education. At the very least, both parents should use their £5,500 limit in a cash ISA.

It should be emphasised that the author is not a financial adviser, and parents need to take independent financial advice before making any investment decisions! The weekend newspapers run regular articles on planning for school fees in their personal finance sections, and these are well worth reading. There are also brokers that specialise in investment schemes for school fees, but be careful not to end up paying for an expensive ‘educational’ wrapper to put round an investment that could have been bought on the open market. Many schools operate advanced-fee schemes, often called ‘Composition Fees Schemes’, that will attract a discount, and the sooner these can be joined, the better. Being in the school’s advanced-fee scheme will not guarantee a place at the school, so make sure the money can be paid to another school if necessary.

Can parents get assistance with the fees?
The 2009 ISC Census revealed that 33.1% of pupils in ISC schools (168,564 pupils in total) received some sort of assistance with fees and that four out of five of those received assistance direct from the school. Schools are very conscious of the need to offer support to pupils for a number of reasons: to broaden the intake, to recognise excellence and to meet their charitable objects. The recent judgements in the public tests on some schools will add more pressure to schools to offer financial (means-tested) assistance.
There are two main sources of support for children in schools: scholarships and bursaries.

Scholarships
Scholarships will normally be awarded by the school as the result of a competitive examination and an interview, and may cover up to 50% of the fees, although increasingly the level of scholarships is being reduced in favour of means-tested bursarial support and a maximum of 20% is now more common. Scholarships in a senior school will usually be awarded at ages 11, 13 and 16, with internal candidates having the opportunity to sit for the latter two awards. Competition for scholarships is very strong, but, subject to the maintenance of satisfactory progress through annual review, they are normally held for the duration of the pupil’s time at the school.

Bursaries
Bursaries may be awarded in addition to a scholarship, where financial need is demonstrated, and the child would otherwise be unable to enter the school. They may also be awarded should the parents fall on hard times while the child is at school and have difficulty with the fees.

Parents who believe their circumstances justify a bursary award should approach the Bursar and ask to complete an application form, noting that account will be taken of siblings at other independent schools. Most schools use a standard application form, based on the Independent Schools’ Bursars Association model, which seeks details of parents’ financial circumstances, supported by documentary evidence and including capital assets. In many cases, the parents will be asked to an interview at the school, often with the Bursar, to discuss the application, in advance of the application being determined. Some schools will undertake home visits to assist in the assessment. The hard-nosed Bursar will not take kindly to an application for a bursary being delivered by the family’s chauffeur in the Bentley. Awards are made on need!

Most schools will review bursaries annually to ensure that an award remains justified, and they may only be awarded until completion of the next public examination. As previously mentioned, many schools are attempting to increase their bursary funds (and therefore bursary support for parents) in order to better demonstrate the public benefit they provide.

There are also a number of grant-giving trusts, but the terms under which they make awards are usually quite stringent. The possibility of a grant will very much depend upon how close the child is to a public examination and whether there are special circumstances that would justify assistance. Parents in this position should contact the Joint Educational Trust at www.jetcharity.org.

Can I get a discount for more than one child?
It is worth asking! Many schools do offer discounts, but it is becoming more common to to go through a bursary application process rather than discounts being available as a matter of course.

What if I run into difficulties with the fees?
There will be parents who, having started down the independent education route, run into financial difficulties for whatever reason and it is important that they let the school know of the problem as soon as possible. Make an appointment with the Bursar to discuss it and see if the school can help. As a Bursar, one of my biggest frustrations is that I often only find out a parent is having problems paying when it is too late. Schools are pretty good at sending reminders, but the worst cases only come to light when the parent is called in to discuss the problem. Schools will certainly try to help, and the first option is often an agreement to pay in instalments if the parent is not already doing so or offer some other repayment plan. It benefits nobody if a debt is allowed to accumulate and become an increasing burden to the parents, particularly if the school is left with no option but to recover the debt through the courts. Whilst recourse to legal action is a last resort option, schools will be prepared to use this course to protect those parents who do pay on time.

Schools will also reluctantly exclude a pupil if the fee is not paid on time (often at half term), and this becomes extremely difficult for the child. The importance of communicating with the school is paramount.

Nicholas Marten is a past Chairman of the Independent Schools’ Bursars Association (ISBA) and is currently Consultant Bursar at Mostyn House School in Cheshire, having previously served as Bursar of The John Lyon School in Harrow, the Kings of Wessex School in Cheddar, Bootham School in York, and Bradfield College in Berkshire.

Glossary
Bursar: A member of staff whose responsibilities usually include management of a school’s income and expenditure, and dealing with school fees.
Bursary: Bursaries enable pupils to attend schools who otherwise would not be able to afford the fees. They are sometimes allocated to pupils from specific families (eg missionaries) or from particular places.
Independent Schools Council information and advice service (ISCias): The information and advice service of the Independent Schools Council, ISCias is a useful enquiry point for parents trying to find an ISC-member school or information about the independent sector in general (see www.isc.co.uk for further information about ISCias and the Independent Schools Council).
Individual Savings Account (ISA): A tax-free investment scheme.
Scholarship: A financial award to a student who shows talent or ability in a particular subject or area.