Helping parents to manage private school fees

The cost of private school fees is impacting families across the country. With the cost-of-living crisis continuing to cause a dent in disposable income, and the new Government now set to press ahead and scrap VAT exemption, there’s a rising concern amongst parents and schools.

Private schools may well struggle to attract new starters and retain existing students under the plan to end VAT exemption for school fees. Pricing increases have already had an impact on the number of pupils joining independent schools, with new starters dropping by 2.7% since last year according to the Independent Schools Council’s latest census.

You can help parents and guardians to manage the cost by introducing Private School Fee Finance.

Allow parents to spread the cost

Parents are increasingly looking to pay their children’s school fees in monthly instalments. So it’s vital that schools provide this flexibility.

According to the Institute for Fiscal Studies, private school fees cost around £15,200 each year on average. This is a huge amount for even high-income families – particularly if they’re required to pay large lump sums each term.

Our Fee Finance allows parents to pay 6, 10 or 12 fixed-rate monthly instalments, making the cost of school fees that little bit more manageable. School fees can become absorbed into the family’s monthly budget, just like other household bills. This provides a more convenient and flexible way to pay for parents who might otherwise struggle to find thousands of pounds upfront.

Of course, there are plenty of benefits for schools too:

• No risk. If a parent defaults on their school fee loan, we won’t recall the money from you. We’re the only provider in the market to offer this no recourse model.
• No hassle. Collecting payments from parents can be a time-consuming task for your administrative team. With Novuna’s finance option, parents self-serve using our online application platform and account management portal, and we collect their monthly repayments.
• Improve cash flow. Your parents will make monthly payments, but you’ll receive the funds in full soon after they sign their initial agreement.
• Offer finance without FCA authorisation. Applying for FCA permissions can be a complex (and costly) process, but you won’t need to worry about that if you offer our specialist finance options.
• Cost-effective. There are no set-up costs, and we don’t charge administrative fees, so your school won’t be hit by unexpected costs when you partner with us.

More about our School Fees Finance

Supporting parents during uncertain times

There are other ways schools are preparing for the addition of VAT. However, many will understandably be hesitant to action any drastic changes until they know how the looming VAT policy will work in practice.

Reduce annual fees

One option for schools is to absorb some of the added VAT charges, thus reducing annual fees for parents. Of course, this is only possible if your school can make cost savings elsewhere.

Introduce advance payment arrangements

Advanced payment schemes allow parents to pay for their fees months or even years in advance, potentially avoiding future VAT charges.

That said, with VAT now set to be reintroduced, the Government may introduce anti-forestalling measures. This basically means that parents may be required to pay tax if they’ve paid for school fees within a certain period before VAT is set to be charged.

It’s unlikely legislation will be backdated but it’s certainly worth considering carefully and consulting accounting professionals before offering parents the choice to cover years’ worth of school fees in advance.

Get ready sooner with Novuna

Schools just like yours are putting plans in place to help parents during these challenging economic times.

Ready to partner with us to offer finance? Get in touch with our team.