SCHOOL FEES PLANNING.

Until recently, the problem of paying for education was one that concerned only the wealthy. These days it affects all parents and their student offspring. Many parents are already paying college and university fees, and this trend of rising fees and falling local authority grants is set to continue - until grants are abolished and replaced entirely by loans. School fees present an additional burden: it is estimated that it costs more than £100,000 (Independent Schools Information Service) to fund a child through private education.

 However, with a bit of forward planning and good advice, you should find that providing your offspring with privately funded education is not a financial nightmare.

 How much would private education cost?

Independent school fees have in the past tended to rise faster than inflation. So just what figures are we dealing with?

 According to the Independent Schools Information Service the fees for a child starting private school this year, will cost you between:

·        £700 and £1,200 per term for three to seven-year olds;

·         £1,200 to £2,500 per term for a day pupil at a prep school (£2,500 to £4,000 for boarders);

·         £1,600 to around £3,000 for senior school up to age 18.

And this is before you buy them a stitch of uniform, or books, games equipment and other necessities. If a second child moves into private education, especially at the higher levels, you could see some hefty bills coming in.

 Those who have time

With the luxury of time, you can save now to fund future education fees.

We can suggest the best way to plan your finances to suit your individual circumstances, and can make sure they are arranged effectively.

Look at the wider picture as well and consider any windfalls you may get from an inheritance perhaps, or gifts from the children's grandparents, who are often more than happy to lend support if they can. If family members want to help, encourage them to seek independent financial advice to help save efficiently for when the child goes to senior school or university.

Finally, see if there is any way you can cut down your household expenditure to put away a few extra pounds each month. Even a regular investment of £100 a month can add up to a substantial school fees pot after four or five years.

Where to start

You should ensure that you are getting the best deal on your mortgage. For example, negotiate a better rate with your current lender, move to a more competitive rate elsewhere, or change the way you pay - by funding your mortgage from a current account for example to give you the opportunity to pay off more of the loan early on. Don't let a fee put you off seeking advice, as you could save yourself thousands of pounds over the period of the mortgage.

Before your next insurance premiums are due for the house, the contents, the car or even a holiday, ring around to see if you can get a more competitive quote. This could save you substantial amounts of money.

 Even by simply swapping to a better deal for your current account or switching to a lower credit card rate, the savings could really add up.

 And remember to ensure your family can carry on paying for school fees even if you can't. Make sure you have enough insurance to cover the entire period of private education if you die or are unable to work

 What are the options for the money you save?

The main savings vehicles are collective investment vehicles - ISAs, OEICs, unit and investment trusts, zeros, investment bonds, National Savings and high-interest deposit accounts with building societies or banks - or a balanced mix of these. Make sure you keep your savings in as many tax-sheltered vehicles as possible.

 And hang on to any PEPs (Personal Equity Plans) for as long as you can. Once you have cashed them in, they cannot be replaced.

 Try not to cash in an endowment policy in its early years for a quick funds fix. It will be worth very little. They are always best held to the end when you benefit from the full maturity value. If you really must cash it in, contact us as we can often get you a better price than if you surrender it to the insurance company who issued it.

Investments

 Help, I've left it too late!

 If you haven't built up enough funds in advance, the alternatives are to pay-as-you-go out of income while your child is at school, or borrow to repay later once they have left. Most people end up using a combination of methods, especially once two or more children reach secondary school, or begin to board.

 Equity Release or loan?

If you own your home, then you may be able to release equity from its value. Alternatively you may need to borrow money as a secured or unsecured loan. Either way, we can help you take the most effective route .

 Funding for university

University may seem a long way off, and the rules may have changed by the time your children are ready to go. But at present, grants are very limited so most students must depend on private help, bursaries or borrowing.

Anthony Chambers Limited (registration no 3985717) is an Appointed Representative of Financial Solutions 2000 Ltd, 136 High Street, West Wickham, Kent, BR4 0LZ, which is authorised and regulated by the Financial Services Authority

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