For parents who have chosen private education for their offspring, paying for school fees is an important consideration.
Not only do private school fees represent a large item of expenditure, but they tend to rise at a pace faster than average price inflation
New research by Lloyds Private Banking has found private school fees have increased by an average of 20% in the past five years.
This represents a rate of growth that is faster than the 17% increase in the Retail Price Index (RPI) measure of price inflation over the same period.
Since 2010, the average annual private school fee for day pupils has increased from £10,686 to £12,864 in 2015.
In addition to outstripping RPI inflation, average school fees have also risen faster than 5% rise in full time gross average earnings since 2010.
During the five years since 2010, parents faced average total school fees of £70,359.
This average was £82,350 in London, the most expensive region, and £56,400 in the North, the most affordable region for private education.
As a result of these rising school fees, they now represent a large proportion of earnings for those parents who choose this route.
Average annual private school fees in 2015 of £12,864 are equivalent to 38% of annual average gross full-time earnings of £34,015.
Back in in 2010, the comparable ratio was 33%.
Lloyds Private Banking found in their research there are now several relatively well paid occupations such as pharmacists, vets, civil engineers, and opticians, where someone on the average earnings for that occupation would be now be paying over a third of their gross annual earnings in school fees.
If you’re thinking about private education for your children, it’s essential to have a Financial Plan which makes reasonable assumptions about future school fees inflation.
This is an effective way of ensuring you don’t run out of money during the time your children are at school.
Do speak to us if private education is on the cards and you need to put a plan in place to pay fees in the future.