How do you choose a private school? PHIL HENDRY offers some useful tips
We’re spoilt for choice when it comes to private education here in Scotland, with some of the most prestigious schools to offer children a fantastic education.The benefits of a private school education are, in my opinion, worth the costs but I’m biased as I was fortunate enough to enjoy this option. A higher standard of teaching, smaller class sizes and world class facilities – who wouldn’t want their children to have the best start they could have?
However, as parents, we know that nothing comes for free. And as the parent of two kids, I for one know I need some financial help on this or end up sending my favourite child to school (just kidding). It’s also a fairly common topic that comes up with clients who are looking into financial planning so it make sense to put pen to paper and look at it in depth.
Is it for you and your child?
It is a serious financial commitment so you need to discuss it with your family. My grandparents sent away my father and uncle to a boarding school – my uncle thrived whereas my father did not enjoy it at all, and was averse to sending me away.
Cost will depend on the school itself (i.e. a school with the exclusivity factor will probably cost more, or a school with a smaller intake. You also need to consider whether or not you want your children to live away (i.e, on site or board)
There is also the cost of uniforms (because as we know – they will no doubt go through a growth spurt at the most inopportune time!). Factor in school trips and extracurricular clubs your children wish to take part in.
When to start planning
This will not come as a surprise. Most people (whether they are a financial planner or not) will say:
As soon as possible. So yes, we’ve said it also.
Unless you happen to have a large reserve of capital on standby for immediate use, start putting money aside as early as you can. The most common ways are:
Cash ISA – if your tolerance to risk is low, then a cash ISA could be an funding option. The benefits of a cash ISA are thus – you can access it easily as and when needed (unless it’s a fixed-term one).
The interest rate you choose means there is the potential for growth.
Plus, if you’re not going to need this money for school fees for several years, you may want to consider locking the money away by looking at fixed-term options.
Stocks & Shares ISA – this option is for those with more tolerance to risk, as you are effectively investing your money in financial markets, so the potential for growth (and loss!) is greater.
Investment Bond – an onshore or offshore bond is a medium to long-term investment option but you will need to seek professional advice as there are tax considerations.
With the cost of school fees increasing, one option (if you have the means) is to pay off a lump sum thereby guaranteeing that you will not get hit by inflation, once the fees go up the next year.
Not every school offers this so you will need to research if this is offered.
Bursaries and scholarships
Whilst you are researching where to send them, you may also wish to look into either of these options. Some of the top private schools offer bursaries as a way of maintaining their charitable status.
Scholarships, where offered, tend to be for either academic or sports related so it will depend on your child’s ability.
Bank of Nan and Grandad?
Grandparents can help by gifting assets to grandchildren. They may also want to put assets into a trust or set up a business. This method involves setting up a company and naming the grandchildren as shareholders. Thereby paying out dividends to pay the school fees.
As previously mentioned, setting up a trust or a business for this means seeking professional advice.
Get financial help
You don’t have to be teacher’s pet to see that the cost of putting your children through private school is a serious financial endeavour.
It may not be right for you and your family at this moment in time
So before you pack them up and send them away, it would be best to seek financial advice for what is certainly a very different long-term investment.
Phil Hendry is director at Reddington Wealth Management