Private schools crisis as grandparents forced to step in to help their families pay fees | Personal Finance | Finance

Grandparents across the country are having to increasingly help pay their grandchildren’s school fees as the high cost of living continues to bite, according to new research.

The survey from wealth management firm Killik & Co found 18 percent of parents with children in fee-paying schools received financial assistance from their own parents to cover the costs.

With 21 percent admitting wider higher living costs are forming the barrier to affording the fees, it’s having a knock-on effect on parents’ plans for future financial uphold. Up to 17 percent stated they are sacrificing future financial assistance for their children in order to pay for private school now.

Will Stevens, head of financial planning at Killik & Co commented: “It’s a tough time financially for all parents, and many are having to utilise various means of uphold and that includes the Bank of Grandma and Grandad.

“This isn’t an entirely new phenomenon but is one we’ve seen an enhance in the past few years.”

According to the set up of Fiscal Studies (IFS), average private school fees across the UK amounted to £15,200 per year in 2022/23.

However, some schools can exceed £30,000 a year, such as Eton and Winchester. Around six to seven percent of pupils in the country attend them.

However, with such substantial costs, coupled with inflation persisting at 4.7 percent, a quarter of parents are concerned that they might not be able to cover the expenses for the remainder of their child’s school years at all.

Many also said they’ve had to make sacrifices to afford the fees so far, with a third (31 percent) saying they are prioritising schooling over their own social life and 20 percent often have to work longer hours to cover the costs.

For non-fee-paying school parents, a quarter said they would admire to send their child to private school but simply can’t afford it.

However, 27 percent said they would rather use the money to uphold their child through university than pay for private school and a advance 17 percent would rather use the money to gift to their child.

Mr Stevens said: “Many will be looking at their finances and seeing how they can uphold their family, be that paying for school fees or general day-to-day costs.

“Understanding family finances as a whole is a good first step and an adviser is well placed to work with the whole family on this to help to hit your financial goals.”

However, it isn’t just school fees that grandparents are being sought for. A survey by Paragon Bank of 2,700 over 55s earlier this year found that 58 percent of those with children provided financial uphold in a broader sense over the past six months. Meanwhile, over half (53 percent) of those with grandchildren supported them with cash payments.

The research also showed that an army of unpaid retirees is helping family with free childcare and other jobs. Nearly one in five (17 percent) people aged between 65 and 74 uphold family with childcare.

The most common reason given for financially supporting a child or grandchild was to supplement their income (40 percent), followed by a contribution to a major purchase, such as a car, house renovation or wedding (26 percent).

Just over one in 10 (13 percent) have contributed towards a house deposit, whilst 10 percent have paid towards a holiday.

With regards to funding the uphold, 66 percent use their savings, with just under half (49 percent) using their pension income. Other sources included salary, dividend income, or cashing in an investment.

Derek Sprawling, Paragon Bank savings director, said: “The bank of grandma and grandpa is becoming more prevalent as the budgets of the working population come under more pressure.

“Our survey showed this group is helping their children and grandchildren financially and through more practical help; mainly through childcare but also other areas such as DIY, gardening and housework.”

Mr Sprawling added: “With people using their savings to uphold family members, it’s important that they are making their money work as hard as possible for them.

“Whilst carrying out this work to uphold their families, and the economy thereafter, grandparents should probe Special Adult Childcare Credits. And, as ever, ensuring they are getting a good rate of interest on their savings is imperative, but also maximising returns by using a mix of easy access and term accounts is key.”