Updated 08 October 2021
Educating your children is expensive – even at a state school. There are uniforms to buy, lunches to pay for, school trips and much more. If you send your child to an independent school then you’ll have school fees to add to all this, and then comes higher education with the double whammy of tuition fees and living expenses.
The good news is that all these costs are predictable, since you know that a baby born today will be starting secondary school in about 11 years’ time. You therefore have at least a decade in which to build up an education fund.
You have around 11 years to save for your child’s secondary education, and 18 years to save for their higher education. Since those are fixed, medium-long term targets, you can build a financial plan for them with the help of a financial adviser.
You may want to consider a higher risk form of saving, such as a stocks & shares ISA. This can deliver more growth over time than cash savings. With longer-term goals (such as a college fund) you may want to take an even higher level of risk. To give one example, just £100 a month at 4 per cent interest over 18 years could generate a fund of over £30,000.
As your goal approaches (e.g. around two years before you need the money) you should start moving the money into safer assets such as cash. Your adviser can help you create an investment portfolio designed to deliver over these timescales.
The costs of primary education include school uniforms, lunches, trips, clubs, extra-curricular hobbies, sports and perhaps private tuition.
For secondary school all of the same costs apply, though many are usually more expensive (e.g. lunches, trips and sports).
If you want to send your child to a private school, the average cost is now £17,000 a year. Covering this from income alone will be a stretch even if you’re very well-off, so it can really help to have a substantial fund of investments ready to draw upon as needed.
If your child goes on to higher education, then the costs can really soar. Average tuition fees in England are now around £9,200 per year, while living costs (if your child doesn’t live at home) may be between £9,000 and £12,000 per year – making an annual cost totalling over £20,000 a year.
University fees may be largely covered by a student loan, though of course that must be paid off eventually.
If you choose to educate your child privately, the costs can be quite steep, as shown in the table below.
|Type of school||Average annual fees|
Private primary (prep, day school)
Private primary (prep, boarding school)
Private secondary (day school)
Private secondary (boarding school)
You can apply for free school meals if you receive any of the following benefits:
You might also get help with the cost of covering extra-curricular activities, such as musical instrument or sports lessons.
Contact your local education authority (LEA) to find out what your entitlements are.
Your first step should be to get a student bank account. Many include great benefits such as zero per cent overdrafts, vouchers and a travel card, where you can save up to 50 per cent on rail fares. Shop around and find out which banks currently offer the best deals.
If you need a student loan (most students do) then you can apply through the government website. You don’t have to start repaying your loan until your income rises above a certain level (c. £25k per year as of 2017/18). The interest charged on your repayments also depends on your income – the highest it can be is inflation plus 3 per cent, and at minimum will match inflation. To see how big a student loan you could get, use the Student Finance Calculator. You’ll need to know your annual household income.
You can also earn money while studying. Having a part-time job can help you keep your debt under control, give you more to live on day to day and also provide something to put on your CV when you start jobseeking after graduating.
As a student you are eligibile for a two kinds of student loan - a tuition fees loan and a maintenance loan. Tuition fees loans are paid directly to your university or college, while maintenance loans are paid to you. Maintenance loans are means-tested, so you can borrow more if your household income is lower. Here are the minimum and maximum amounts you can borrow (per term) if you need to.
|Min. maintenance loan||Max. maintenance loan|
|Living at home||£3,124||£7,324|
|Living away from home||£3,928||
£8,700 (outside London)
£11,354 (in London)
Find out more about how to calculate your student loan amount.
If your family’s income is below a certain level, you may be eligible for a grant from the Educational Grants Programme (by Family Action). The grants aren’t huge (between £200 and £300) but may be useful to cover additional costs of education such as clothing and study equipment. Applicants must be aged 14 or over.
If you’re a post-graduate student, there are specific programmes in place to help support your studies. Master’s students can receive a Postgraduate Master’s Loan to help with course fees and living costs.
A Postgraduate Doctoral Loan can help with course fees and living costs if you’re completing a PhD, for example. You’ll be charged interest as soon as you receive your first payment.
There’s additional support if you’re a student with a disability. This is known as the Disabled Students’ Allowance (DSAs).
If you’re based in Scotland, funding arrangements for students are different. Find out what you’re eligible for at the Student Awards Agency Scotland website.
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