In order to pay for private school fees, parents were compelled to borrow up to £22,000

Due to the introduction of VAT on private school fees at the beginning of this year, more parents are taking out loans to cover their children's tuition

In an attempt to spread the cost of private school fees, parents have been taking out more loans to cover independent school fees. The implementation of VAT this year has increased the strain on household finances because parents were already taking out loans.

In the previous year, the average for parents who use School Fee Plan, a financing company for school fees, increased by 11% to 21,735. This is 19% more than it was two years ago.

Last year, the total amount lent was about 15% more than in 2022 and 5% more than in 2023.

This surge in demand for borrowing to cover the cost of private schooling predates the January implementation of VAT on independent school fees.

Premium Credit, the company that owns School Fee Plan, stated that many schools have not yet announced fee increases, and that parents and schools have been acclimating to the change during the first three months of 2025.

According to Stewart Ward, head of the School Fee Plan, "Our data indicates that both the total amount lent and the average amount borrowed rose steadily even prior to the implementation of VAT and are likely to continue to rise."

What is the cost of attending a private school?

According to the Independent Schools Council's (ISC) most recent report, the average day school's annual fees for the 2023 - 2024 academic year were £18,000.

For day students attending boarding schools, this number rose to about 24,000, and for the typical boarder, it rose to about 42,500. The next edition of the report is anticipated to see a significant increase in these fees as private schools pass on the VAT hike.

Approximately 21,600 would be the average daily school fee if all schools were to implement the full 20 percent.

According to a separate analysis, the introduction of VAT on fees has resulted in a more than 100,000 increase in the cost of sending a single child to private school until the age of 18.

According to a School Fee Plans survey, nearly all (94 percent) of head teachers, bursars, and finance managers at independent schools stated that they are searching for programs that allow parents to spread the cost of their children's tuition. According to research conducted last year, 89% were.

According to Ward, "this highlights that for many parents, it makes sense to spread the cost over a year rather than in termly payments, exactly as we are all used to doing for our mortgage payments."

"That's true even if they have the financial means to pay each term because most people's budgets and lifestyles work better when they pay on a monthly basis.

Although paying the fees in full may be more convenient for some parents, there are risks involved; read our article on the benefits and drawbacks of paying private school fees in full.

According to government estimates, 37,000 private school students (6 percent) will drop out of school as a result of the VAT on fees.

Government data, according to the Independent Schools Council (ISC), indicates that 77 private schools have declared their intention to close since the policy's announcement in October 2023.