Number of private school parents enquiring about loans up by a quarter
The number of enquiries for loans to help pay private school fees has surged by a quarter.
School Fee Plan said the number of parents and schools it is in talks with has risen significantly so far this year, compared to the same point in 2023.
The company, which is used by 420 private schools across the UK, including by Harrow School, pays clients’ school fees up front at the start of each term.
Parents then repay in monthly instalments.
School Fee Plan, a subsidiary of credit firm Premium Credit, charges a transaction fee of around 3.56 per cent, which some schools pay on parents’ behalf.
Unlike fees in advance schemes offered by schools, which grant parents a discount if they pay in lump sum several years in advance, monthly finance packages do not decrease costs.
However, a spokesman for School Fee Plan told The Telegraph it helps parents manage cashflow from month-to-month.
It is primarily used by families with children at cheaper private schools.
‘More parents expected to use schemes’
The company said the number of parents taking loans out with the firm has jumped 93 per cent since 2022, largely due to increased private school fees over the past few years.
But it has seen a further surge in demand since Labour doubled down on its private school tax raid last Autumn, and expects “to see more parents using schemes such as ours” if Sir Keir Starmer wins the general election, the company said in a report published in May.
Labour has pledged to remove tax exemptions for private schools as soon as possible if it enters No 10, which would make them eligible for 20 per cent VAT.
Stewart Ward, the education director at School Fee Plan, told The Telegraph this could have a “major impact on parents and schools”, prompting many to seek help with funding.
Mr Ward explained: “The key thing is at the moment, the traffic we’re seeing on our website, the conversations we’re having with potential new schools is up a reasonably high double digit on the previous year’s activity – probably 25 per cent.”
Private schools plan to increase fees
The majority of private schools plan to increase fees to cope with the potential VAT charge, according to a Telegraph survey earlier this year.
A poll of 350 independent school leaders found that 95 per cent expect to hike school fees if Labour wins the general election.
It has stoked fears that many families could be priced out of the sector.
A report by the Institute for Fiscal Studies last year found between three and seven per cent of privately-educated pupils could switch to state schools as a result – around 40,000 pupils.
The company added in a statement: “Interest in our proposition from schools and parents has increased significantly and we believe this is driven by a number of headwinds – in the main inflation, pressure on household income and the potential for VAT to be charged on school fees if Labour are successful in the imminent general election.”
More than 10,000 pupils have their fees funded through the company each year, including students at top private schools including Harrow, Dulwich College, and Sir Keir Starmer’s alma mater Reigate Grammar School.
In some schools, including the £19,000-a-year Wellingborough School in Northamptonshire, around half of parents have their fees funded by the company.
It comes amid confusion over whether Labour will backdate its VAT plans on private schools to stamp out on “buy now, save later” loopholes if Sir Keir’s party wins the election, prompting parents to seek alternative options.
Many schools have been encouraging parents to make use of fees in advance schemes to shield their finances ahead of a potential incoming Labour government by offering discounts to those who pay several years’ fees up front.
However, there are concerns this could present potential tax problems to HMRC, with Labour also hinting that it will try and clamp down on the schemes.
Sir Keir has promised to spend the £1.7 billion it claims charging VAT on school fees will create on plans to recruit 6,500 new state school teachers.
A Labour Party spokesman said: “Labour will invest in delivering a brilliant state education for children in every state school by recruiting over 6,500 new teachers, funded by ending tax breaks for private schools.
“Independent schools have raised fees above inflation for well over a decade and do not have to pass Labour’s proposed change onto parents.”