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Sancho Panza

Parents Offering Houses As Guarantee On Private School Fees

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Telegraph 16/2/14

' Parents struggling to cope in the recession are giving private schools a charge on their home in return for deferring fee payments so they can afford their children's education.

The "charge" on the house means that pupils can remain at Britain's leading schools and the fees are claimed back when the property is sold.

As the property effectively acts as a guarantee, in extreme circumstances schools could force parents to sell up in order to recover the debt.

Mike Lower, general secretary of the Independent Schools Bursars Association, said: "At a time of recession parents will struggle more to pay their fees, so it is only logical to estimate this is happening more often."

He added that it is unclear how many arrangements are in place across the country, but they normally only occur for children already studying the school.

A head teacher from leading South London day-school, who would not be named, told the Mail on Sunday that the practice is now common place.

Millfield in Somerset, which charges up to £30,385 a year and whose alumni include Sophie Dahl, King's School in Canterbury, which has fees of up to £32,235 and boasts playwright Christopher Marlowe amongst its former pupils, and Saint Felix in Suffolk, which charges up to £24,420, are all understood to have entered into such arrangements.

The schools say that the charges are only taken out as a "last resort" when parents are in real difficulty.

John Whyte, a governor at Saint Felix which offers a floating legal charge against property as part of their affordability packages, said they had been running the scheme for four or five years and it has been a success.

"I think we have to use all the weapons in our armoury to make paying the fees as flexible as possible for parents who have come to us with problems," he said.

Private school fees have more than doubled in the past decade, rising at almost twice the rate of inflation.

Telegraph 25/4/13

'Figures show that the number of children enrolled in fee-paying schools fell by 0.3 per cent to just over 500,000 – the fourth drop in the last five years.

It emerged that the pupil population has been swelled by a rise in the number of overseas pupils, with admissions from Russia up by more than a quarter in just 12 months.

Among British pupils alone, entry rates are down by 0.4 per cent this year. '

http://www.telegraph.co.uk/education/educationnews/10342677/Rising-private-school-fees-pricing-out-the-middle-classes.html' rel="external nofollow">

Telegraph 30/9/13

'Middle-class families risk being priced out of independent education because of “outrageous” fee increases over the last 20 years, a private school head has warned.

Writing in the book, he added: “We must face up to an uncomfortable truth: that the price increases in the independent school market are in danger of becoming unsustainable…. The rate of fee increase in the past 20 years has been outrageous, and although we are seeking to control this, it cannot be reversed.”

Recent figures showed that average annual day school fees rose by around £450 to £12,153 last year.

The cost of independent education has almost doubled in just over a decade, with the average boarding school now charging around £27,600 per pupil.

The book – based on interviews with fellow heads from more than 30 independent schools – said schools “have been far too profligate, and we have wasted money in the past”.

It suggests costs have been driven up by a number of factors, including expensive buildings that have left some schools with large loans or paying over-the-odds on maintenance.

Heads interviewed by Mr McGrath told of concerns over high staff pay, expensive consultants, IT equipment that sits unused and even the award of bursaries to some pupils who should not have received them.

Speaking to the Telegraph, he said schools should seek to generate extra income by selling online qualifications, writing branded textbooks, renting out facilities and opening “franchise” schools overseas to generate extra income.

He quoted a study that showed fewer middle-class parents had bought into private education between 2010 and 2012.

"The very worrying finding is what appears to be the disappearance of the first-time buyer," he said.'

Edited by Sancho Panza

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Hmm.

Certainly London parents with outsized house valuations are 'dipping into them' to fund school fees which are typically 50% higher in London than say Birmingham.

The school fees have risen because Labour whacked teachers' wages up so much.

I guess it makes sense for schools to come to arrangements with parents where possible rather than kick them out for non-payment. I think a school would have to be on the ropes to accept any such arrangement upfront, rather than midway through a school career - upfront MEWing should be the only option for a parent.

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The school fees have risen because Labour whacked teachers' wages up so much.

Wouldn't private schools have to pay higher rates anyway to attract the best teachers- so they will be competing with other private schools rather than the state sector surely?

Edited by wonderpup

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Wouldn't private schools have to pay higher rates anyway to attract the best teachers- so they will be competing with other private schools rather than the state sector surely?

Well yes, but if the state is offering £20k then you pay £25k, and if the state is offering £30k you now have to offer £40k.

The state is 90% of the market for teachers, so they control rates.

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:lol: Time for many people to just accept that they can`t afford the price of making their children "special", then hopefully a few more of these scams, sorry schools, would go under.

Evidently they can, the market really hasn't shrunk at all.

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School closures are already happening - and there's more to come without question.

Not only have costs (and therefore fees) risen astronomically over the past 20 years but the middle class customer base is being destroyed. Fees were once affordable with a couple of decent/high wages. But now you're looking at £35k pa (once you include "extras") per child. That takes a hell of a pre-tax income if you have a couple of kids and maybe a mortgage to pay. And, of course, wages have barely risen - and certainly not at the rate that fees have.

In addition, the subsidised fee-payer base is disappearing. There used to be quite a large number of services/foreign office children - but both the numbers of these and the size of subsidy is shrinking.

A lot of schools are saving themselves from closure by taking in huge numbers of foreign students. But at great cost to the ethos of the school, IMO. The traditional British boarding school is soon to be dead and buried. It'll be replaced by, or evolve into, creches for the bling laden, spoilt brats of the international ultra rich.

Do I believe this stuff about charges being put on houses? Yes. Because people are mental when it comes to their kids. When hard times come, or families find themselves overstretched, the last thing that goes is the school fees.

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Some in Edinburgh have gone bust, and I hear one former Girls school now takes boys as well :lol: Soon they will be doing BOGOF to keep up the pretence.

The private schools near me do seem to have cranked up their advertising.

A couple have gone bust.

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MEW by any other name.

For some reason this reminds me of the film "Trainspotting" where the junkies want to buy some drugs and try to use credit, when rebuffed they hand over their cash....."Ah cash, that'll do nicely".

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The private schools near me do seem to have cranked up their advertising.

A couple have gone bust.

I noticed that....I even saw one this weekend advertising "gift vouchers"....WTF !!!!

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Wouldn't private schools have to pay higher rates anyway to attract the best teachers- so they will be competing with other private schools rather than the state sector surely?

Not forgetting cost of living as well.....

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I've often thought that the public school industry has to suffer from the cost of housing. At work I'm surrounded by public school pupils (myself included) but very few of us can ever see a way we could pay for our kids to go, and we're all earning multiples of the average wage. Just too much of our income goes on rent and mortgage.

I wouldn't call them a scam though. Public school pupils are hugely over represented in well paying jobs and public life. It is a huge investment/cost though.

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Well yes, but if the state is offering £20k then you pay £25k, and if the state is offering £30k you now have to offer £40k.

The state is 90% of the market for teachers, so they control rates.

Well since there is a oversupply of state school teachers the private sector should be able to snap them up for two-a-penny.

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Unless my sprogs make out like Eastern European bandits or Columbian drug barons, I suspect they'll be the last generation of our family to be privately educated. It's simply unaffordable through salaried employment now.

I'm not convinced there's any cost benefit calculation that can justify the spend in financial terms. Even when it was cheaper most people did it either out of family habit (and knowing nothing else) or because spending on education, even if offering poor financial returns, was a better fit with their values than big houses, cars and bling.

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Wouldn't private schools have to pay higher rates anyway to attract the best teachers- so they will be competing with other private schools rather than the state sector surely?

If a private school is receiving over £20k pa per pupil and a state school receives about £4k to £5k per pupil from the state then they should be able to afford to pay teachers more - irrespective of anything labour or the coalition has done with teachers wages in the state sector. The much smaller pupil:teacher ratios, better buildings and sports facilities is what makes the difference and why private school fees are so high. I also wonder if over the last few years there has been a fall in the values of the private schools' reserve investments - less interest on their cash reserves, downgraded land and property assets etc so there isn't a flow of income from that direction.

Y

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I also wonder if over the last few years there has been a fall in the values of the private schools' reserve investments - less interest on their cash reserves, downgraded land and property assets etc so there isn't a flow of income from that direction.

http://independentexec.co.uk/2013/08/independent-school-becomes-academy-clears-debt/

A Tynemouth private school’s debt has been paid off by the state as it converts to academy status.

The Government pushed through a controversial proposal earlier this month to turn a fee-paying school into a state-funded academy, according to an Education Guardian report.

The King’s school in North Tyneside, which is part of the Woodard group of independent schools, had £5m of debt cleared by the Department for Education when it gained approval to merge with Priory school, a local state primary.

The new Kings Priory school is set to open next month and the once-£10,000-a-year school will become free to parents.

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You would think that there is room for a second division of private schools charging around 10K per year with slightly larger class sizes etc, the problem is that when you add in the advertising and admin costs of a private school the standards can quickly fall below those of the local comprehensive.

In the 1970s a lot of private schools went bust and I think we will see a repeat of that, then when the next boom comes the surviving schools will be able to charge even more due to lack of competition.

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Gtr. Manchester school fees seem to be around £10k p.a. so there's a massive North-South disparity?

£35k, is that in London or is that a typical price in the south?

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If you are sending your children to a private school because you believe the actual education offered is better then you are wasting your money. The recent PISA results that were used to bash state education showed that, when adjusted for parental income, children in private schools did worse than their state educated peers.

Once they reach university state pupils, with the same exam results at A-level, significantly outperform their privately educated peers.

If you are after better contacts and a network for them in later life, as well as the confidence / soft skills etc then it might well be worth it.

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Gtr. Manchester school fees seem to be around £10k p.a. so there's a massive North-South disparity?

£35k, is that in London or is that a typical price in the south?

35k is for the top of the range full boarding option. Lower tier and day schools will be a lot less.

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I guess the private school in question has to be in a reasonable state of financial health to be able to defer receiving the fee income. How many are realistically going to be able to offer this arrangement. even as a last resort to existing customers.

The magic housing equity pie is being pressured from a few sides now- care home fees, school fees, pension income.

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