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Independent schools- fee in advance schemes
Posted: Thu Feb 25, 2016 1:21 pm
by grammar2012
hello all,
Has anyone heard about the fee in advance scheme for Independent schools? I initially thought paying the next 5 or 7 years fees in one go saves u the inflationary increases and is supported by a small discount at the point of payment. However my understanding seems to be incorrect.
I will appreciate your observations/comments. If you have taken advantage of the scheme- will you recommend it?
Re: Independent schools- fee in advance schemes
Posted: Thu Feb 25, 2016 1:40 pm
by Yamin151
We would do if we could. The benefits
Its at current fee level so you are protected from the year on year fee increase
Often as you mention it comes with a small dicount
Things to be aware of
If you leave I assume you would get a discount, but worth checking the small print!!
Hopefully the school in rude health but do be aware of the risk if the school went out of business you are highly unlikely to recoup your fees paid.
But on balance, if we could we would.
Re: Independent schools- fee in advance schemes
Posted: Thu Feb 25, 2016 2:07 pm
by grammar2012
thanks Yamin151.
I just checked with the school but its not a full protection against the year on year rise. You get given a % benefit. so for e.g. if the benefit u can have is say 2% and the increase is 6%, you still have to pay 4% rise year on year. There is also no discount to be has if you pay it off in one go.
I stand to be corrected though.
Re: Independent schools- fee in advance schemes
Posted: Thu Feb 25, 2016 2:18 pm
by hermanmunster
Some schools do a discount if a lump sum is paid ahead, it is supposed to be a better deal than saving the money with low interest rates and having to pay higher rate tax on the interest anyway:
The advance payment is then invested by the private school which, because of its charitable status, is exempt from paying any tax on interest earned from the investment.
One school, Radley College in Oxfordshire, with fees of just over £30,000 a year, estimated one in six of its parents have taken advantage of the offer - with £17 million accruing to the school as a result.
Its website say that “funds paid into the scheme are invested in British Government or other fixed interest stocks which guarantees both interest payments and capital redemption”.
“As the College enjoys charitable status it does not pay tax on the interest received,” it adds, “this can be very beneficial when parents and others are assessed at the higher rate of tax.”
Re: Independent schools- fee in advance schemes
Posted: Thu Feb 25, 2016 2:28 pm
by fairyelephant
Schools run different schemes - they are not all the same. At DD's school you get a discount in the first year then pay current year prices for years paid in advance. It's not always possible to pay all 7 years as far as I know. With DS it was as you describe with not all the increase protected against, less of a good deal. Of course they may change the scheme if interest rates start to rise so it's worth looking at it again at that point.
Re: Independent schools- fee in advance schemes
Posted: Thu Feb 25, 2016 2:32 pm
by PurpleDuck
No discounts in our school at all, I wish there were! But, I suppose, at least they don't charge extra for paying monthly by DD instead of up-front.
Re: Independent schools- fee in advance schemes
Posted: Thu Feb 25, 2016 2:43 pm
by Ladymuck
Our school doesn't advertise their scheme at all, I had to ask, but is similar to the OP's, so doesn't protect against future fee rises. However we can pay the annual fee on 1st September with a 1.5% discount. Given a term's fees would be due then, with the full year paid by 1 April, that isn't a bad discount. But out of the 3 fee-paying schools I have been a parent at, none advertised schemes/discounts for lump sums, but 2 offered me a scheme when I enquired.
Re: Independent schools- fee in advance schemes
Posted: Thu Feb 25, 2016 3:02 pm
by no_stress
I enquired at my daughter's GDST school when she started but the benefit was so minimal it did not seem to make much sense. You do carry a bit of a risk because you may decide you are moving or are unhappy with the school, so at the time I felt not worth it, it was less than a 1% reduction. I had been hoping for something more generous, but I guess the stronger schools financially don't need the money as much, and maybe those that need it more urgently are riskier ones to be paying large chunks of money to.
Re: Independent schools- fee in advance schemes
Posted: Thu Feb 25, 2016 5:46 pm
by grammar2012
Thank you all. It seems like such a small benefit( if at all) that the 10 monthly dd makes more sense. However slightly nervous about the 3-6% year on year increase that the school accountant suggested has been happening for the last 5 years.