Magazine article The Spectator

School Fees: A Luxury You Can't Afford

Magazine article The Spectator

School Fees: A Luxury You Can't Afford

Article excerpt

The credit crunch is taking a terrible toll on the middle classes. They've started to give up their organic boxes (sales are down 10 per cent at some companies), their foreign holidays (can the new fad for camping really be a choice thing? ), their Chelsea tractors, and even their privacy (their second homes are now available as holiday lets). So what's next? Probably their children's private education.

School-fee inflation is running at well over 6 per cent a year, the average day school costs £3,000 a term, and top schools such as Eton and Wycombe Abbey charge £9,000-plus. Fifty-one schools in the UK charge more than £25,000 a year.

That means if you have two children at top schools, you need to find £60,000 out of post-tax income -- £100,000-odd pre-tax -- just to pay the basic fees. And even for a bog-standard day school you still need to find £30,000 before tax and before uniforms, ski trips, violins and polo lessons. In total, Sainsbury's Finance says we are spending well over 30 per cent more on private education than we were in 2003-2005, while real incomes, outside a few obvious sectors, have barely budged.

Recent research from Halifax showed that only 13 professions still pay enough to allow parents to send their children to even the cheapest private school. In 2002, 23 did. Yet the number of children being privately educated in the UK has risen by 40,000, to about 615,000.

So where's the money coming from?

Savings and grandparents, but also increasingly from banks. According to Sainsbury's Finance,18,000 parents took out personal loans last year for an average of £9,005 each to pay school fees: a total of around £165 million, and Sainsbury's expects that number to rise. But that's just the beginning. The lifeline for parents over the last decade has been mortgage equity withdrawal -- bumping up their mortgages to get their hands on ready cash. It's hard to get exact numbers but a survey by the National Centre for Social Research in 2006 suggested that of the £22 billion worth of equity withdrawn in 2006, around 1 per cent went specifically towards school fees. So that's at least another couple of hundred million, and my guess is that this figure is on the low side, given the facts that almost no one saves for school fees in advance and that every newspaper article ever written on the subject suggests remortgaging as the best way for non hedge-fund managers to pay for school fees. …

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