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Spend & Save

If you want to give a child a private education, start by doing your homework

Going outside the state system could cost parents £170,000 over the years. But, says Kate Hughes, there are ways to ease the burden

A good start in life is crucial and a private education has often been seen as the route to future success. But the costs involved in sending a child to independent school are soaring, according to research by the Halifax.

Fees have risen by 40 per cent in the past five years, the bank found, double the national inflation rate over the same period. In the last year alone, the average annual fee for a day pupil has increased by 6 per cent, equivalent to twice the rate of inflation, and now exceeds the £10,000 mark.

And, if prices continue to rise at this rate, a four-year-old starting a private education this autumn could end up bringing home a total bill of £170,000 by the time he or she reaches 18, according to the Centre for the Economics of Education (CEE).

Aspirational parents in the south of England have the most to worry about, the Halifax reported. The average annual fee in the South-west has risen by nearly half in the past five years to £10,671. And in the South-east, private school fees will set a family back £11,379 per child per year, the most expensive average fees in the country.

The fees for privately educating just one child may account for more than a third of average earnings, but the costs don't stop there. If your child wishes or needs to board at school, it will more than double the average annual cost. The uniform for a growing child can cost thousands of pounds over the years, particularly if the clothing required is unusual, such as Eton dress.

Then there is additional educational equipment, such as laptops and learning software; extra tuition outside school hours if required; and, of course, all the extracurricular activities. Music lessons often start at around £50 per hour, and a student's clarinet, for example, could cost at least £200. Sports equipment that parents might have to buy ranges from tennis rackets and shuttlecocks to skis, an épée for fencing, and even a pony, to be kept either at the school's stables or for an additional cost at a local equestrian centre. And don't forget those rugby and hockey tours to Australia and New Zealand. Closer to home, be prepared for anything from excursions to theatres and art galleries to geography field trips – the cost of activities such as these will certainly add up.

But despite the formidable, and rapidly rising bills involved, the number of pupils attending an independent school has increased by almost 36,000 or 6 per cent since 2001-02, according to the Department for Children, Schools and Families. At first glance, the advantages of a private education are clear. According to the Independent Schools Council (ISC), pupil-to-teacher ratios in independent schools have dropped slightly over recent years to an average of just over nine pupils per teacher in 2007-08, less than half the average class size of a state secondary school.

Fee-paying schools spent almost £700m in 2007-08, around £1,350 per pupil on improvements including accommodation, teaching equipment and building maintenance – twice the amount spent per pupil by state schools.

But what many parents really want as a return on their investment are good exam results. More than three-quarters of privately educated A-level students got an A or B grade in 2007, compared with a national average of less than half.

And there are other benefits of an independent education that are not so quantitative, argues Diana Gant, head teacher at the Mount School in York, an independent school for girls whose fees this year are £13,200 for day pupils and £20,520 for boarders, up 5 per cent in a year.

"Independent school leavers have a strong sense of who they are and have the confidence to communicate with all sorts of people," she says. "They are encouraged to be creative, independent learners, and are well prepared for the next stage of their education."

In the long term, this could all mean that the financial rewards, for the child if not for the parents, are not to be sniffed at. The CEE found that pupils who left an independent school in the 1980s and early 1990s were now typically earning around 35 per cent more than their state-educated peers. Of this 35 per cent, half was directly attributed to education rather than social background. The centre calculates that – based on average school fees at the time, and regardless of personal development – the parents of those school-leavers realised a return on their investment of around 7 per cent.

Raising the funds for an independent education will require advance planning, and you should be thinking about this well before your eldest child's first day at school, says Christopher Wicks of the independent financial adviser N-Trust.

"Once you have identified the fees you expect to pay for each child, and have factored in how much they will increase [over the years], you have to decide whether you can afford to pay out of your income, or whether a savings or investment plan is necessary," says Mr Wicks. "As with all investment objectives, you need to decide what level of risk you are willing to take to achieve your financial goal, then find the appropriate product.

"If you are starting to put regular sums away now for a five-year period, for example, a cash deposit savings scheme could be your best option."

In this way, he says, your money will grow but will not be exposed to short- to medium-term fluctuations in the stock market. He suggests a tax-efficient cash individual savings account (ISA).

"For longer-term investments, consider a unit trust," adds Mr Wicks. "But also consider putting contingency plans in place by insuring the value of the fees in a protection policy that will pay out if you are not around or unable to work."

And if your children are gifted there is the very real possibility of taking the sting out of the total cost. A quarter of independent school pupils get financial help from their school in the form of scholarships and bursaries – ranging from academic and sports-related awards to assistance on the basis of religious faith. Schemes are also available to help particularly able children from low-income families.