How to pay for school fees in 2030

If you are planning to pay for your children’s education it makes sense to start saving early.

Given the high cost of a private education today there is no such thing as ‘too early’. School days may seem a long way off, if your little ones are cutting their teeth and learning to talk, but this can be the ideal time to start your school fees war chest. 

But if you’ve left it later then don’t panic, there is still time to build a fund that can help meet these fees - and the tips below should help you maximise your savings. 

In recent years, school fees have been rising far faster than inflation, meaning that costs are going up far quicker than most parents’ wages. To make matters worse, parents have seen a bumper increase this year, with private school fees becoming subject to VAT for the first time in January.

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As a result, independent school fees were 22.6% higher, on average, at the start of this year, when compared to 12 months ago, according to the Independent Schools Council (ISC). It says that this means that the average fee per term now stands at £7,382 — or £22,145 a year.¹

For parents looking to pay independent school fees from the age of 11 to 18, this is a minimum of £155,015 per child — and in all likelihood, a lot more if fees continue to increase. This bill will also be significantly higher if primary school years are also included.²

Meeting this full cost out of take-home pay can be difficult for all but the wealthiest parents, which is why many choose to put aside savings and investments to help meet some of these costs.

Those, who are likely to start paying school fees from 2030 — or beyond — should bear in mind the following tips when building a savings fund.

Set a realistic savings goal

Rather than look at these ‘average’ figures, get up-to-date information on what independent school fees are in your local area. There can be significant variation depending on location, the prestige of the school, and whether your child is likely to be a day pupil or boarder.

Don’t forget to factor in annual increases to school fees, as well as a host of other extras — from uniforms, sports clubs, music lessons and excursions — that you will also have to pay for. Online parents’ groups can be a good source of information on which schools they’d recommend and what a realistic ‘total’ cost is likely to be.

Saving enough to cover seven-plus years of education can seem daunting at the outset. But it is worth thinking about how much you might be able to cover from earnings, then looking at what the potential shortfall might be and adjusting savings goals accordingly.

Fidelity’s Stocks and Shares ISA calculator can give you an idea of how much you might need to save per month over a five, seven- or 10-year period to meet your target.

• Go to the Stocks and Shares ISA Calculator

Look at growth assets

Given that school fees have risen faster than inflation in recent years, you ideally want to invest in growth assets so your savings can also keep pace with future price hikes.

For those looking to invest for more than five years, one option is to invest in equities, which have historically delivered better returns than cash savings over longer time periods.

If your child is due to start school in just five years' time, you may not want to put all of your money in equities given these can be volatile over shorter periods.

However, you don’t have to have the full amount saved on day one. If it’s five years to the start date, then you are effectively looking at a 12-year investment horizon (five years to the first payment, then seven further years of meeting these costs), with fees typically paid termly each academic year. This gives scope for a more sophisticated investment approach, which combines both equities for the latter years, and cash savings to ensure you can meet the first year’s payments in full.

There are a number of ways to do this. You might want to set up separate investment accounts and a deposit account, and contribute to both on a regular basis.

Alternatively, you could save through a Stocks and Shares ISA that offers access to a cash fund. Fidelity offers this facility.

• More on cash and money market funds

If you have more than five years until the first payment is due, you may want to invest in equities initially but gradually move a portion of this money into less volatile assets — such as cash and bonds — a couple of years before the school start date.

Saving money regularly into an investment account means you automatically buy more for your money when prices dip and less when they rise (otherwise known as pound cost averaging). But while you might be aiming for long-term growth, it is important not to take too much risk as the school start date approaches.

Make sure your savings are tax-efficient

Whether you are investing in the stock market, sticking with cash — or doing a combination of the two — an Individual Savings Account (ISA) remains one of the most tax-efficient ways to save for the future.

Currently, all adults can save up to £20,000 a year into tax-efficient ISAs — which can currently be split between both cash and stocks and shares options. This means parents can save up to £40,000 a year between them in ISAs.

There is no income tax to pay on interest earned on cash ISAs, and no capital gains tax on profits made within a stocks and shares ISA. In addition, money taken out of an ISA in stages — as you’re likely to need if paying annual school fees — is not subject to any further income tax.

• Open a Fidelity Stocks and Shares ISA 

However, the government is currently reviewing the patchwork of different ISA products ahead of the Autumn Budget, and there has been speculation that the Chancellor may restrict the amount that can be put in cash ISAs. However, Rachel Reeves has confirmed that she is not planning to lower the overall £20,000 limit.

• Read: What can we expect in the Autumn Budget?

Enlist the family

There is no getting away from the fact that paying independent school fees will stretch most parents’ budgets and is likely to mean scaling back on other spending, be it holidays or new cars. In some cases other family members can help, with some families relying on help from grandparents. 

This may be particularly beneficial if the older generation face an inheritance tax liability, as contributions towards school fees can be counted as gifts that may be excluded from their estate for IHT purposes. There are a number of gift exclusions, covering ‘regular’ gifts and potentially exempt transfers (for which the donor needs to live for a further seven years for it to be free of IHT), so if this is relevant, it is worth speaking to a tax specialist.

• Read: 5 tax hacks: how to make financial gifts without a big tax bill

Look into scholarships and bursaries

Some schools offer bursaries and scholarships which can cover part of the fees. It is worth speaking to schools about what might be available, particularly if your child is gifted academically or excels at sport or music. Some schools will also offer staged payments to help manage costs, and there are also some advance fee payment schemes. These can allow parents to effectively pay at today’s prices, potentially avoiding future increases.

However, extreme care is needed. Many private schools are selective, so you don’t want to invest in these schemes and then find your child does not meet the entrance criteria. At least with a regular ISA, you have the option of using this money for other purposes if you later decide not to go down this route.

Some of these advance fee payment schemes will be investment plans — so make sure you check the T&Cs carefully, particularly in regard to investment costs and, most importantly, that your money is held in a ring-fenced, segregated and protected account. You don’t want your money to be at risk if the school itself, for example, ran into financial difficulties.

Do your homework

It isn’t just your kids that should be doing their homework. If you’ve got a few years to save, then it is worth putting in the legwork to look at what you are getting when it comes to an independent education.

Research school performance both in the private and state sectors. Depending on where you live and the quality of schools in the state sector, some parents will opt to pay for early years’ schooling before moving to a state secondary school; others may feel there is more benefit in doing the reverse. It may also be worth looking at the relative costs of moving to an area with better-performing state schools, including selective grammar schools.

Rather than pay independent fees, some parents choose to ‘top up’ state school provision with additional tutoring, to help their children make the most of their potential and get the grades they need.

Read more from this series

•    Read: How to save for university costs - in just 10 years
•    Read: How to pay for a wedding in 10 years
•    Read: How to pay for a house deposit in 5 years

Source:

^1,2    BBC News, 15 May 2025

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