More Parents Take Out Loans to Fund Children’s Education

An increasing numbers of parents are applying for bank loans to fund their children through private school, new figures reveal.
Household expenditure on private school fees reached approximately ?7.9billion last year, up from ?6.9billion in 2001-02.
Sainsbury’s Bank revealed it had seen a 38 per cent increase in loan applications to cover independent school fees during the past year.
Loans manager at Sainsbury’s Bank, Steven Bailie, said he expected to see a further rise in numbers as fees have gone up by about 50 per cent since 1999.
He said that about 620,000 children are now being educated in private schools, and they are consistently charging more in fees.
‘We expect to see a growing number of parents taking out loans to help pay for their children’s education. Those parents doing this need to make sure that they shop around and find a competitive loan rate.’
Based on ONS data, the bank’s figures showed families in London usually spent the most on education fees, at an average of ?577.20 per year.
Families in the East Midlands spent the least, at around ?140.40 per year.
These average figures were generated from all households, including those without children in private education and those with no children.
Separate figures from the Independent Schools Council, however, show that average fees are now about ?21,600-a-year for boys’ boarding schools whilst for girls, the figure is ?20,400.
For pre-preparatory private education (for children aged two to seven years), parents can expect to pay between ?1,000 to ?1,500 a term.
Fee fixing allegations
The annual rise in private school charges was under public scrutiny recently following an investigation into alleged fee fixing which saw fifty of the country’s leading public schools ordered to pay out a total of ?3.5million.
Earlier this year it was revealed that schools including Eton, Harrow, Winchester and Cheltenham Ladies’ College must each pay ?10,000 in addition to making payments averaging ?60,000 to a new educational charity.
An investigation by the Office of Fair Trading led to the payout.
The schools had admitted that, over the past three years, they had been sharing detailed and sensitive information about the fees they were intending to charge both for boarding and day pupils.
Meanwhile previous studies have already revealed that tens of thousands of parents are keen to send their children to private school as a result of mounting disillusionment with the state sector. This inevitably brings a financial consequence.
They are cancelling family holidays and juggling two or three jobs in order to fund a private education.
The ISC recently provided detailed analysis covering hundreds of thousands of postcodes and collected from 900 member schools.
The research showed that nearly a quarter of ISC pupils (23.8 per cent) originate from average or below average backgrounds. Almost 10 per cent (some 43,000 pupils) live in postcodes where household income is less than the national average.
Of these, 10,000 reside in officially classified ‘hard-pressed’ areas and include families on low incomes, single parents on council estates and people living in high rise flats.
And another survey by ING Direct found that almost half (44 per cent) of parents are saving money specifically for their children’s education. In the last few years, this figure used to stand at just 12 per cent.
The fact that many parents are willing to take out loans – and thus pay interest – to finance school fees demonstrates the importance that they place upon high quality education said a spokesman for the ICS.
Independent school parents who have average or below average incomes represent about a quarter of the total and many are going without exotic holidays or new cars to give their children an independent education.