Private School Fees Increased Twice as Fast as CPI and Wages over Ten Years. Parents Partially to Blame
Whether around the dinner table or at the school gates, private school fees are an ever-present source of conversation in the UK. Analysis of data from the most recent Independent Schools Council (ISC) Annual Census indicates that families are now paying around £8.3 billion in private school fees in the UK, up from £5.2 billion in 2006. That’s more than a 50% increase over the past ten years. What is the cause of this dramatic increase - a increase in demand for school places? Surprising as it may be to parents, the data reveal that no, there isn't a higher call for private-school places. Where there has been a dramatic increase over this time period is in applications.
After digging through the data, we may have found a surprising reason for school fee rises - the good intentions of parents. The parental strategy of applying to more schools in an effort to lock in the "best" spot results in individual schools experiencing a large increase in applications. A rapid rise in applications creates the illusion of an increase in demand, emboldening schools to raise fees. However, the private school system as a whole does not seem to be facing a supply and demand imbalance, meaning parents are behind this frothy "demand."
With over half a million children (around 1 in 14) in private schools at any time, many of our families are affected by rising fees. The question is, is this 50% increase in line with general inflation, or is it out of the ordinary? If school fees increased along the same trajectory as wages and other budget items, like food and transportation, then education wouldn’t be any more “expensive” than it was ten years ago.
Comparing Private School Fees with CPI and Wage Growth
To help answer whether private school education has become more expensive in real terms, we have analyzed private school fee data (from the ISC) and compared it to CPI and wage data (from the Office of National Statistics). We found that education has, indeed, gotten a lot more expensive in the UK over the past decade.
Private school fee inflation (at more than 50%) has far outpaced other expenses and general wage growth in ten years: the CPI (a measure of the cost of expenses such as transportation and food) has gone up 28% and wages have only gone up 27% over this same period of time, as you can see in the following chart. The conclusion here is that a private school education is significantly more out of reach than it was ten years ago.
Will School Fees Rise as Rapidly in the next Ten Years?
Will the next generation ever be able to afford private school? The good news is that data shows a gradual slow down in private school fee inflation. In fact, we see a significant slow down in fee increases since the financial crisis in 2008, as you can see in the following chart. Across the industry, inflation seems to have stabilized around 3.5%, which is more in line with CPI and general wage growth.
Means-Tested Bursaries make Private School more Accessible
In the face of continual fee increases, the data shows that schools are making an effort to make a private school education more accessible to those less able to afford one. Following a large jump in 2009, the value of means-tested bursaries has generally been on the rise, with the percentage change in bursaries outpacing fee increases. So while fees are on the rise in general, the boost in means-tested bursaries perhaps makes private school a bit more affordable for those at the bottom of the wealth spectrum.
Historical and Current Private School Fees
Back in the school year 2006/2007, average boarding fees were around £6,700 and day fees were £2,900. Parents can now expect to pay north of £10,300 to send their child to a boarding school and £4,500 to a day school. The following table (based on ISC data) shows average tuition per term across age groups, for both boarding and day spots.
| Age Group | Boarding | Day |
|---|---|---|
| Nursery | £2,983 | |
| Junior | £7,572 | £4,078 |
| Senior | £10,217 | £4,822 |
| Sixth Form | £10,736 | £5,111 |
| Overall | £10,317 | £4,445 |
Families will also pay more or less depending on where the school is located in the UK. This makes sense, since cost of living expenses vary significantly depending on location. The following table shows average boarding and day school fees, per term, by region (based on ISC data).
| Region | Boarding | Day |
|---|---|---|
| The North | £10,333 | £3,568 |
| Scotland | £9,721 | £3,753 |
| West Midlands | £10,234 | £3,848 |
| Wales | £9,566 | £3,948 |
| East Midlands | £9,800 | £4,067 |
| East Anglia | £9,731 | £4,533 |
| South West | £10,246 | £4,546 |
| South East | £10,601 | £4,951 |
| Greater London | £11,940 | £5,299 |
| Overall | £10,317 | £4,445 |
When considering the cost of your ideal school, it can be useful to get an idea of the fees charged by a selection of renowned and popular schools across the UK. The following tables list fees for the 2016/17 school year.
| UK Day Schools | Fees per Term |
|---|---|
| Alleyn's School | £6,042 |
| Brentwood School | £5,800 |
| Brighton College | £7,500 |
| Canford | £8,503 |
| City of London | £5,577 |
| Colfe's | £5,370 |
| Felsted | £7,375 |
| Ibstock Place | £6,400 |
| King’s Wimbledon | £6,800 |
| Kingston Grammar | £6,015 |
| Laymer Upper | £6,170 |
| London Oratory | £7,900 |
| Manchester High School for Girls | £3,751 |
| Maynard | £4,195 |
| Mill Hill | £6,547 |
| Millfield | £8,010 |
| Milton Abbey | £5,965 |
| Putney High | £5,803 |
| Royal Russell | £5,730 |
| Rugby Day | £7,126 |
| Saint Martin's | £4,230 |
| Scarisbrick Hall School | £3,450 |
| Seven Oaks | £7,197 |
| Seven Oaks (sixth form) | £8,172 |
| Silcoates | £4,420 |
| St Paul's | £7,827 |
| Stafford Grammar School | £4,039 |
| Stowe | £8,260 |
| Surbiton High | £5,308 |
| Tonbridge School | £9,386 |
| UCS | £6,264 |
| Wellingborough | £4,970 |
| Westminster | £8,416 |
| Wimbledon High School | £5,776 |
| UK Boarding Schools | Fees per Term |
|---|---|
| Blundell's | £10,955 |
| Brentwood School | £11,378 |
| Canford | £11,171 |
| Charterhouse School | £12,258 |
| Eton | £12,354 |
| Felsted | £10,995 |
| Harrow | £12,450 |
| London Oratory | £10,865 |
| Mill Hill | £10,442 |
| Millfield Boarding | £11,925 |
| Milton Abbey | £11,780 |
| Rossall | £10,150 |
| Royal Russell Boarding | £11,325 |
| Rugby | £11,357 |
| Seven Oaks Boarding | £11,493 |
| Seven Oaks Boarding (sixth form) | £12,468 |
| Stowe Boarding | £11,490 |
| Tonbridge School Boarding | £12,513 |
| Westminster Boarding | £12,154 |
Why have Private School Fees Increased so Much? It's Not a Supply/Demand Issue
We think parents may be to blame for the rise in school fees. Yes, it's true. In an effort to increase their odds of securing a coveted private school spot, parents are sitting their offspring for more and more schools. As a result, many individual schools have seen the number of applicants nearly double since 2006; schools naturally feel emboldened to increase fees in such an environment. However, more applications does not imply an increase in real demand to the system as a whole.
According to our analysis, the private school system is not facing a real imbalance of supply/demand. It's true that more pupils than ever are enrolled in ISC schools, more than a half million. However, new private schools are opening every year to absorb this extra demand. In fact, the number of students per school has been trending down.
The following chart shows a relatively steady state of supply and demand: a slight increase in the UK population is accompanied by a slight increase in the number of ISC schools and pupils. The numbers are in line. In fact, the number of pupils per school has decreased slightly in the past few years, which signals a possible drop in real demand. It does not appear that a large imbalance of supply and demand is causing the increase in school fees.
When trying to make heads or tails of your school justifying an increase in fees, it is perhaps useful to consider how a school spends your hard-earned money.
Where do School Fees Go?
While school fees have far outpaced inflation, it’s not all bad news – assuming your school is managed efficiently, higher fees should lead to more benefits for your child. So let’s look at where those school fees go. Keep in mind that every school manages their budget differently and there may be significant variations across schools that are rural vs. urban, boarding vs. day, etc. Despite these differences, we have found schools typically spend the most on teaching (around 50% - 60% of the budget), followed by premises (around 15% - 25%). We analyzed the financial statements of a number of schools and found the following ranges in spending.
We, personally, find it comforting to see the budget breakdown. Who doesn't want their child’s teachers to be paid well, the sports pitches to be green and lush or the latest equipment in your child’s IT and science labs. That said, no one likes to receive that letter from school stating that fees are increasing for the next school year. Expect increases to continue to some extent - we don't know many parents who will apply to fewer schools, in an effort to bring down perceived demand.