Funding education: how to save for school fees and university

Educating your children is expensive, even at a state school, as you must buy uniforms, pay for lunches, school trips and more.

If you send your child to an independent school, you’ll have school fees to pay and then higher education has the double whammy of tuition fees and living expenses.

The good news is that all these costs are predictable.

For example, you know that a baby born today will be starting secondary school in about 11 years’ time, so you have at least a decade to build an education fund.

How can I save for my children’s education?

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 and long-term targets, you can build a financial plan for them with the help of a financial adviser.

You may want to consider a high-risk form of saving, such as a stocks and shares individual savings account (ISA).

This can deliver more growth over time than cash savings. With longer-term goals, you may want to take a higher level of risk.

To give one example, just £100 a month at 4% interest over 18 years could generate a fund of over £30,000.

As your goal approaches, around two years before you need the money, you should start moving your money into safer assets such as cash. 

An adviser can help you create an investment portfolio to deliver over these timescales.

What are the main expenses of education?

The costs of primary education include school uniforms, lunches, trips, clubs, extra-curricular hobbies, sports and perhaps private tuition.

For secondary school, the same costs apply, though many are usually more expensive.

If you want to send your child to a private school, the average cost is over £17,000 a year, according to the Independent Schools Council.

Even if you're well-off, covering this from income alone will be a stretch, so it can help to have a substantial fund of investments ready to draw upon as needed.

If your child goes on to higher education, the costs can really soar.

Average tuition fees in England can be up to £9,250 per year, while living costs may be between £9,000 and £12,000 per year, so the annual cost could exceed £20,000.

University fees may be largely covered by a student loan, though, of course, that must be paid off eventually.

Average cost of private school fees in the UK

If you educate your child privately, the costs can be quite steep, as shown in the table below.

As a parent, can I get help with the cost of education?

If you’re on a low income, you may be entitled to help with school meals, transport and uniforms. 

You can apply for free school meals if you receive any of the following benefits:

• Child Tax Credit
• Working Tax Credit
• Universal Credit
• Income Support
• Income-based Jobseeker’s Allowance
• Income-related Employment and Support Allowance
• The guaranteed element of Pension Credit
• Support under Part VI of the Immigration and Asylum Act 1999

You might also get help with the cost of covering extra-curricular activities, such as musical instruments or sports lessons.

Contact your local education authority (LEA) to find out what your entitlements are.

How can I support myself as a student?

Your first step should be to get a student bank account.

Many accounts include great benefits such as 0% overdrafts, vouchers or a travel card, where you can save you money on rail fares. Shop around and find out which banks currently offer the best deals.

If you need a student loan, you can apply through the government website.

You don’t have to start repaying your loan until your income rises above a certain level, depending on when you study and your plan.

The amount of interest charged is linked to inflation, measured by the Retail Price Index (RPI), so if this rises, so will the amount you need to pay back.

As RPI is high, the UK government recently decided to temporarily cap the interest rate at 7.7% for all students and graduates.

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 keep debt under control, give you more money and boost your CV when you start job-seeking after graduating.

Am I eligible for a grant or loan?

As a student, you may be eligible for two kinds of student loans - a tuition fee 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 necessary.

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.

If you’re a post-graduate student, specific programmes are 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. 

There’s additional support if you’re a student with a disability. This is known as the Disabled Students’ Allowance (DSA).

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.

If you found this article useful, you might also find our article on student finance hardship funding informative, too.