*/
Strategic planning can ease the burden of escalating school and university fees. Elizabeth Davidson considers the financial weaponry on offer
There’s no denying the high cost of bringing up children. The thought of unnecessarily adding school fees sends shivers down backs. The potential tripling of university fees, regardless of when they need to be paid back, is creating yet more anxiety. Given proper planning and preparation, however, it may all be far more affordable than anticipated.
Many independent financial advisors are experienced in this field, and claim to be able to help parents shave substantial amounts from their overall expenditure through long-term planning and use of tax-advantageous investing or equity release schemes. Obviously, every parent has his or her own unique financial circumstances and should seek independent advice from a reputable advisor.
Private education is expensive, with top schools charging annual fees approaching £30,000. Add in the cost of uniforms, school trips, music lessons and sports kit, and the bills soon mount up. No tax relief is available on private school fees. Parents may therefore want to think strategically and use all financial weaponry – tax advantages and shrewd investment of equities – at their disposal.
First, they may want to calculate how much it is all going to cost and look for ways to minimise the expense.
Most schools publish their fees and discount structures, and parents can plan ahead allowing five per cent per annum for inflation to work out how much they need to save. They will need to plan for the whole educational period. Continuity is important in education – imagine if a child had to move school a term or two terms before their GCSEs or A-levels, or equivalent? This could be particularly disastrous given that independent schools sometimes follow alternative qualifications such as International GCSEs.
Second, funding options should be considered as early as possible. “Package products” may not be the right answer.
Third, grandparents may be able to help out. They can give £3,000 tax free each year and will be helping out their family as well as reducing their inheritance tax liability. Trusts, where tax liabilities can be re-assigned, may be a better option in which case independent financial advice should be sought.
Fourth, where parents have a lump sum available that they can invest at an early stage, they are in a strong position. They have the full range of investment options available to them and may want to hire professionals to manage their capital effectively. The school itself may even be able to help – Harrow school, for example, advertises an advance fees scheme under which parents pay a lump sum in advance which is then invested to pay the full cost of their child’s education. Alternatively, parents may want to retain control of their money.
Some parents pay the fees by saving up, setting aside a portion each month. The key to all fee payment plans is to start as soon as possible. Many parents begin their savings or investment plans before their children are born. Other options include spreading the cost over a longer period of time, using an equity draw-down plan, loan facility or re-mortgage. Using ISA allowances is another option. Savings should go in the name of a parent who is basic rate taxpayer.
It doesn’t stop at school of course, as children will continue to further study. Many universities have already signalled they intend to charge the maximum £9,000 per annum fees. Obviously, that’s before living expenses such as rent, food and travel are taken into account. And then there are gap years and postgraduate courses...
Financial advisors report that they are receiving an increasing number of enquiries from parents worried about the cost of university. Many parents, anxious lest their child begin their adult life with vast debts hanging round their neck, want to plan ahead. University students could easily leave with £30,000 – £40,000 of debt. Some parents may want to pay this off after the students leave university since the students themselves do not have to repay until they earn at least £21,000 pa.
If parents have five or more years to go then they may be interested in collective investments such as unit trusts or investment trusts or stock market portfolios. Cash bonds, corporate bonds and property may suit the more risk-averse parent.
Whatever route a parent chooses, it is important to investigate all options available first. There may be more ways to keep the costs down than they think.
Elizabeth Davidson is a freelance journalist
School Fees
Many schools offer discounts for fees paid in advance, and where there is more than one child at the school. It is also worth investigating what, if any, awards are available at the school of choice.
Scholarships may be available for children gifted in music, art or academic studies, up to a maximum of 50 per cent of the fees.
Bursaries may be available to parents who would otherwise not be able to afford the full cost. Other awards and assisted places schemes may exist, for example, bursaries for parents in the Armed Forces.
Many independent financial advisors are experienced in this field, and claim to be able to help parents shave substantial amounts from their overall expenditure through long-term planning and use of tax-advantageous investing or equity release schemes. Obviously, every parent has his or her own unique financial circumstances and should seek independent advice from a reputable advisor.
Private education is expensive, with top schools charging annual fees approaching £30,000. Add in the cost of uniforms, school trips, music lessons and sports kit, and the bills soon mount up. No tax relief is available on private school fees. Parents may therefore want to think strategically and use all financial weaponry – tax advantages and shrewd investment of equities – at their disposal.
First, they may want to calculate how much it is all going to cost and look for ways to minimise the expense.
Most schools publish their fees and discount structures, and parents can plan ahead allowing five per cent per annum for inflation to work out how much they need to save. They will need to plan for the whole educational period. Continuity is important in education – imagine if a child had to move school a term or two terms before their GCSEs or A-levels, or equivalent? This could be particularly disastrous given that independent schools sometimes follow alternative qualifications such as International GCSEs.
Second, funding options should be considered as early as possible. “Package products” may not be the right answer.
Third, grandparents may be able to help out. They can give £3,000 tax free each year and will be helping out their family as well as reducing their inheritance tax liability. Trusts, where tax liabilities can be re-assigned, may be a better option in which case independent financial advice should be sought.
Fourth, where parents have a lump sum available that they can invest at an early stage, they are in a strong position. They have the full range of investment options available to them and may want to hire professionals to manage their capital effectively. The school itself may even be able to help – Harrow school, for example, advertises an advance fees scheme under which parents pay a lump sum in advance which is then invested to pay the full cost of their child’s education. Alternatively, parents may want to retain control of their money.
Some parents pay the fees by saving up, setting aside a portion each month. The key to all fee payment plans is to start as soon as possible. Many parents begin their savings or investment plans before their children are born. Other options include spreading the cost over a longer period of time, using an equity draw-down plan, loan facility or re-mortgage. Using ISA allowances is another option. Savings should go in the name of a parent who is basic rate taxpayer.
It doesn’t stop at school of course, as children will continue to further study. Many universities have already signalled they intend to charge the maximum £9,000 per annum fees. Obviously, that’s before living expenses such as rent, food and travel are taken into account. And then there are gap years and postgraduate courses...
Financial advisors report that they are receiving an increasing number of enquiries from parents worried about the cost of university. Many parents, anxious lest their child begin their adult life with vast debts hanging round their neck, want to plan ahead. University students could easily leave with £30,000 – £40,000 of debt. Some parents may want to pay this off after the students leave university since the students themselves do not have to repay until they earn at least £21,000 pa.
If parents have five or more years to go then they may be interested in collective investments such as unit trusts or investment trusts or stock market portfolios. Cash bonds, corporate bonds and property may suit the more risk-averse parent.
Whatever route a parent chooses, it is important to investigate all options available first. There may be more ways to keep the costs down than they think.
Elizabeth Davidson is a freelance journalist
School Fees
Many schools offer discounts for fees paid in advance, and where there is more than one child at the school. It is also worth investigating what, if any, awards are available at the school of choice.
Scholarships may be available for children gifted in music, art or academic studies, up to a maximum of 50 per cent of the fees.
Bursaries may be available to parents who would otherwise not be able to afford the full cost. Other awards and assisted places schemes may exist, for example, bursaries for parents in the Armed Forces.
Strategic planning can ease the burden of escalating school and university fees. Elizabeth Davidson considers the financial weaponry on offer
There’s no denying the high cost of bringing up children. The thought of unnecessarily adding school fees sends shivers down backs. The potential tripling of university fees, regardless of when they need to be paid back, is creating yet more anxiety. Given proper planning and preparation, however, it may all be far more affordable than anticipated.
Sam Townend KC explains the Bar Council’s efforts towards ensuring a bright future for the profession
Giovanni D’Avola explores the issue of over-citation of unreported cases and the ‘added value’ elements of a law report
Louise Crush explores the key points and opportunities for tax efficiency
Westgate Wealth Management Ltd is a Partner Practice of FTSE 100 company St. James’s Place – one of the top UK Wealth Management firms. We offer a holistic service of distinct quality, integrity, and excellence with the aim to build a professional and valuable relationship with our clients, helping to provide them with security now, prosperity in the future and the highest standard of service in all of our dealings.
Is now the time to review your financial position, having reached a career milestone? asks Louise Crush
If you were to host a dinner party with 10 guests, and you asked them to explain what financial planning is and how it differs to financial advice, you’d receive 10 different answers. The variety of answers highlights the ongoing need to clarify and promote the value of financial planning.
Most of us like to think we would risk our career in order to meet our ethical obligations, so why have so many lawyers failed to hold the line? asks Flora Page
If your current practice environment is bringing you down, seek a new one. However daunting the change, it will be worth it, says Anon Barrister
Creating advocacy opportunities for juniors is now the expectation but not always easy to put into effect. Tom Mitcheson KC distils developing best practice from the Patents Court initiative already bearing fruit
Sam Townend KC explains the Bar Council’s efforts towards ensuring a bright future for the profession
The long-running fee-paid judicial pensions saga continues. The current cut-off date for giving notice of election to join FPJPS is 31 March 2024, and that date now gives rise to a serious problem, warns HH John Platt