Sky-high school fees force parents to dig into pensions and savings
Spiralling education costs after the government’s school fees crackdown are forcing a record number of parents to dip into their pensions and savings to keep their children at private school.
According to a fresh Rathbones study, parents face a “double squeeze” having to fund higher private education fees at the expense of their own long-term financial security.
Nearly a quarter of families with children in private school have withdrawn cash from their individual savings account (Isa) or long-term investments to meet higher fees, researchers found, while one in five have reduced their pension contributions.
In addition, more than a third have economised on holiday plans, and 29 per cent said they had postponed holiday improvements as a result of the hikes.
“As families prepare for a new school year, many are finding that the true cost of private education extends far beyond the school fees themselves,” said Amanda Cook, Rathbones financial planning director. “The pressure is forcing households to make difficult trade-offs, with some reducing pension contributions, scaling back investment plans and dipping into savings to fund educational opportunities.”
VAT crackdown leads to higher fees and fewer pupils
At its maiden Budget in 2024, the government ploughed ahead with a pre-election pledge to make school fees subject to VAT. For decades, payments to private schools were exempt from the consumption tax in a move that supporters said helped alleviate pressure from the strained state sector.
But the crackdown, which came into force in April 2025, forced an overwhelming majority of private schools to hike fees by as much as a fifth in order to consolidate their bottom lines. Major public schools like Eton College and Tonbridge School now charge more than £60,000 a year, over 50 per cent more than the UK’s median salary.
At least 77 schools have closed their doors in the wake of the raid, including Longacre School and Thetford Grammar, which can trace its roots back more than 700 years.
The crackdown has also led pupil numbers to plummet by 30,000, more than seven per cent of the total private school population.
Cook said that the VAT grab has “amplified… pressures” on family budgets.
“While many families have chosen to absorb the additional costs, a significant number are doing so with financial strain, while others have delayed enrolment or changed their schooling plans altogether,” she added.