The grandparents sacrificing their retirement to pay for rocketing school fees

The pressure to pay school fees is causing divisions within families
The pressure to pay school fees is causing divisions within families

Doting grandparents – delighted by children’s offspring but equally thrilled they can “hand them back” – are often found dealing out favours where they can. A chocolate biscuit between meal times, perhaps even a new bike for Christmas. Then there are grandparents who find themselves in situations fortunate enough to provide substantially more: private school fees upwards of £20,000 a year, if such financial demands are beyond the means of cash-strapped parents.

However, a new report by the Independent Schools Council (ISC) shows that fees have, on average, increased by 8 per cent for the 2023-24 academic year compared with the previous year. And that’s before Labour, who may find themselves in power come November, apply an extra cost of VAT at 20 per cent, causing normal working families who have chosen private education to have unprecedented financial grief as they try to find enough cash for their children to continue at their schools.

So it’s not altogether unsurprising that the number of new pupils joining private schools has dropped by 2.7 per cent since last year, which is the biggest fall since the ISC started collecting data in 2011. The choices now facing many families who would have previously entertained private school are stark: some will have to consider state education for their children; others will have to find new ways to free up even more capital. And that may mean grandparents.

For Beth and Dean*, in their 70s, it’s a sacrifice worth paying. They started paying school fees for their two grandchildren (a boy, 14, and girl, nine) five years ago at a cost of £45,000 a year. But recently the parents’ business has taken off, so they now pay half - £22,500 a year.

“It was a painful decision financially for us to pay our grandchildren’s school fees, but in the end they have settled in happily. Our grandson has dyslexia and our granddaughter has dyspraxia, and is very bright, so we strongly felt it was the right thing to do,” says Beth.

“We were both state-educated, my husband at a grammar school, but today’s schools are just so dysfunctional that we could not rely on them.

“It does affect our lives,” she adds. “We’ve given up private medical care, which was a sacrifice. There isn’t a Waitrose where we live but if there were, we wouldn’t be shopping at it. We go on fewer holidays and drink a bit less wine. We are certainly more aware of the cost of shopping and less free than we once were.”

Originally, the pair already had funds from which to draw. “We downsized before the decision to start paying fees so what’s left from that sale contributes to fees now,” explains Dean. “The rest comes out of savings or straight off the bottom line. There was no lump sum put aside for this. It was a decision made within weeks when it just felt necessary, given that our grandson was struggling and that state schools in our area are badly strapped for cash.”

Stories such as Beth and Dean’s clearly illustrate that for many UK families, getting children through private education is a multi-generational affair. Last year, research from wealth manager Killick & Co found that 18 per cent of parents with children in independent schools were receiving financial aid from their parents to help cover fees. Sarah*, who lives in west London with her two children, is one of them. Her elder child is severely autistic and in a special school, while her younger child was initially educated in the state sector. This soon proved not to be the place for her, and Sarah’s parents offered to fund her daughter’s move to a local independent faith school. “My parents can’t do much about my son’s situation in terms of providing him with an education, but they said that they could do it for my daughter,” says Sarah.

As a single parent, Sarah was unable to find the money for the school’s fees, which next year will just top £20,000. Her parents, who still run their own business as they approach their 80s, cover all their granddaughter’s fees. “They saved their pensions,” Sarah explains, “and some of it is family money – and money from my mum’s family abroad. My parents live an extremely frugal life.”

Melanie Sanderson, managing editor of the Good Schools Guide, explains that such scenarios are not new – nor as the result of Labour’s proposals. “Grandparents have always helped out with school fees, and in a way it’s quite smart because [that money] won’t be subjected to inheritance tax,” she says.

But just casting an eye over various parenting forums, it’s clear that parents accepting this sort of financial help need to consider common provisos (“Grandparents often want a say in the chosen school”) and a robust long-term plan (“If [the grandparents] become sick, will [the payment of fees] be considered as deprivation of assets and will you be liable?”). A recent newspaper article enraged internet users when an anonymous woman complained about her parents reneging on their commitment to pay her children’s annual school fees of £90,000 – because her mother had developed Alzheimer’s and her father wanted to use their remaining money to fund her care.

Grandparents wishing to pay for years of school fees have to consider not only future ill health, but whether they want to be able to fund all grandchildren – current and still to arrive. If so, bills could easily soar above £150,000 a year. And if not, resentment in the family is fairly likely to be a given. One recent post on a parenting forum read: “[My husband’s] brother has announced that as there [are] ‘no good state schools’ where he lives and they ‘don’t want to move’, their parents have offered to put his two boys through private senior school. Not our children nor his sister’s, just his.” An evidently careworn user in the same boat replies: “Nothing I can do about it, and it’s not my money, it’s in-laws money... so none of my business. I try not to think about it, so I don’t sour relations.”

But aside from considering yet unborn grandchildren, it’s the volatility of the current moment that is really putting the pressure on. No one knows exactly what Labour’s plans will entail – fee rises could be between 8 and 12 per cent, as imagined by some industry experts, or up to the worst-case-scenario 20 per cent mark.

“Parents at these schools don’t drive flashy cars – they aren’t wealthy – rather they just want to do the best for their children,” Dean says. “We’d imagine about half of them will need to leave should the fees be hiked [by Labour]. For us, we will continue paying, as it’s a necessity.”

For many, the rises have come somewhat out of the blue. “The fee increases we’re seeing are not something that was reasonably expected when people made their decision [about where to send their children to school],” says Gianpaolo Mantini, partner at investment management company Saltus. “If they made their decision four or five years ago then we’ve had two years of rampant inflation, and now we’re talking about another possible 20 per cent. It’s potentially a 30-40 per cent increase in fees over the last four years. People went into it expecting some increases each year, but not the equivalent of 10 per cent a year.”

Fee inflation is down to a variety of factors, says Sanderson, first among them being market forces. “One of the reasons that schools can continue to put fees up is that parents will pay it,” she says. “The more expensive the school, the more people there are queuing up to send their children there.” The school facilities arms race hasn’t helped either in driving up fees, but this “intense competition of who has got the biggest, the best and the most,” as Sanderson describes it, is also driven by the parent body. Those music blocks, rooftop running tracks and coding centres won’t pay for themselves – nor will teachers’ pensions, competitive salaries to retain staff and utility bills, the prices for which have shot up in recent years. “It’s a perfect storm for schools now,” Sanderson adds.

This is where, increasingly, grandparents are being called upon, since scrimping on holidays, forgoing new cars, and remortgaging – the advice often given in these circumstances – is no longer enough. Last year, Weatherbys, the private bank, calculated that the parents of a pupil who took their A-levels in 2023, having been educated at an “average cost” boarding school from the age of seven, would have spent £378,000 on fees in total, and £186,000 for the equivalent day pupil. Weatherbys’ report found that that figure could rise to more than £825,000 for a child starting that boarding journey today, and to £413,000 for one at day school.

Mantini adds that, inevitably, as the general election approaches, more intergenerational conversations will be taking place. “A lot of grandparents are aware that this is coming up in the next year or so,” he says. “Nobody is quite sure what the rules are going to be, but they’re being proactive and saying that they are in a position to help, giving adult children the peace of mind to know that they might not have to make a decision to pull their child out of school.” He predicts that more occasional help might well be on the way – “It might not be [explicit] help with school fees but helping with things that are part and parcel of school life: uniforms, trips. It’s going to be a case of people helping out to the extent that they can afford to.”

*names changed