The number of inquiries for loans to help pay private school fees has risen by a quarter, according to the School Fees Scheme.
The company, which helps parents by paying school fees in advance and allowing payment in monthly installments, saw a significant increase in interest compared to the same period last year.
School Fee Plan, a subsidiary of Premium Credit, is used by 420 private schools across the UK, including Harrow School. The company charges a transaction fee of around 3.56%, which some schools cover on behalf of parents. Unlike advance fee plans that offer discounts on lump sum payments, these monthly financing packages help parents manage their cash flow without reducing overall costs.
A spokesman for the school fee plan explained that the company's services are most popular among mid-level private schools. The number of parents taking out loans from the company has jumped 93% since 2022, driven by private school fee increases and concerns about Labour's proposed tax policies.
The increase in demand comes after Labor confirmed its commitment to scrap VAT tax breaks for private schools, making them liable for a 20% VAT tax if the party wins the general election. Stuart Ward, director of education at School Fee Plan, warned that the policy could significantly impact parents and schools, prompting many to seek financial help.
“The key thing at the moment is that the traffic we're seeing on our website, and the conversations we're having with potential new schools, is up a reasonable 10% compared to the previous year's activity – maybe 25%,” he said. wing.
A Telegraph survey earlier this year found that 95% of private school leaders expected fees to rise if Labor introduced VAT. This has raised concerns that many families could be deprived of private education, which could lead to 40,000 students switching from private schools to state schools, according to the Institute for Fiscal Studies.
The School Fees Scheme noted that interest in its services was driven by several factors, including inflation, pressure on household incomes and potential VAT charges. The company supports more than 10,000 pupils a year, including those at prestigious institutions such as Harrow, Dulwich College and Reigate Grammar School.
At some schools, such as the £19,000-a-year Wellingborough School in Northamptonshire, around half of parents use the company's finance services. Amid the uncertainty, many schools are encouraging parents to pay fees several years in advance through advance planning to avoid potential tax increases. However, this could lead to tax issues with HMRC, and Labor has hinted at clamping down on such practices.
Labor aims to use an estimated £1.7bn from VAT on school fees to recruit 6,500 new teachers in state schools. A Labor spokesman said: “Labour will invest in delivering a great state education for children in every state school by appointing more than 6,500 new teachers, funded by ending tax credits for private schools.”
They added that independent schools, which have raised fees above the rate of inflation for more than a decade, do not have to pass on the changes Labor is proposing to parents.