School fees

As a member of the Armed Forces, your children are well looked after when it comes to their education. Check out your options depending on where you are stationed. If you want to go-it-alone, perhaps a school fees plan might help.

Help for your child's education

The Children’s Education Advisory Service (CEAS) provides a dedicated service exclusively for Service and MOD families providing professional advice about all aspect of children's education both in the UK and overseas.

If your child goes to a state school in England make sure you let the school know that you are in the Armed Forces.  They will then be able to access the Service Pupil Premium.  This enables schools to provide extra, mainly pastoral, support for children with parents in the Armed Forces. It doesn't mean that your child is underachieving compared to their peers, the Premium is provided in recognition of the additional support schools often need to provide for Service children. Children will continue to qualify after their parents have left the Armed Forces, for up to a maximum of six years.

If you choose for your child to be educated outside of the state system your family may be entitled to help with the Continuity of Education allowance - see CEAS for more information. If you choose for your child to go to a fee-paying school you might want to consider taking out life insurance to cover the school fees or including the cost of school fees when calculating the amount of life cover you need.

Overseas education is dependent on the area you are posted to – see the Service Children’s Education website for specific information.

Another way to plan for your child’s education is with a school fee plan.

School fee plans

School fee plans are designed to help parents and guardians pay school fees. They often come with some measure of protection for your investment and can be tailored to your individual circumstances and needs.   

How a school fee plan works

Money fitness tip

 

School fees plans can be attractive investments – but always talk to a financial adviser before you commit.

School fees plans are a way to save that is usually promoted as tax-efficient, and usually offers some kind of protection. While they’re intended to provide for school and university fees, the money can be used for other things if you choose.

There are three main options:

  • Capital schemes. Investing a lump sum in a guaranteed fund usually guarantees that you’ll at least get back your original investment. However not all plans have a guarantee. The earlier you invest (when your baby is born, or even before, is best), the more chance you have of making money on the investment.
  • Income or regular savings schemes. You make regular monthly or annual payments to a savings scheme. Again, the earlier you start saving the more money your investment could earn.
  • Combined schemes. You invest a lump sum at the start of the plan and top it up with regular or irregular payments over a short term. 

Things to consider before choosing your school fees plan

Are you happy with the risks of school fees planning?

Like all investments, with school fees plans there’s no absolute guarantee of how much you’ll get. The value of your investment can go down as well as up and you may get back less than you invested. It might not be enough to cover the fees when the time comes to actually pay them.

Make sure you’re comfortable with the risks before you invest.

How much tax will you pay?

School fees plans are designed to be tax efficient, but it may not always be the case, especially if you cash a plan in early. How much tax you may need to pay will depend on the type of plan you choose and your circumstances. Before buying your plan, talk to the provider and make sure you understand what tax you may have to pay.

Will you have to pay charges for a school fee plan?

You might have to pay initial fees, annual management charges or even a percentage of the profits, depending on the school fees plan you choose. Check with the provider what the fees and charges are before you buy their plan

Are you protected if something goes wrong?

If you use financial companies that are regulated by the Financial Conduct Authority (FCA), there are ways to complain or seek compensation if you have a problem with the plan or how it was sold.

Not all school fees plans are regulated by the FCA. Investing in an unregulated scheme can be very risky. You can check if a company is regulated by searching the FCA Register.

Are there better investment options than school fees planning?

A school fees plan isn’t the only option, and it might not be the best one. There is a wide range of different savings and investment products available, which could be suitable for school fees planning, depending on your circumstances. Before making a decision, investigate the other products on the market to see if they’re better suited to your needs. See Investments at a glance.

Have you got the right advice on a school fee plan?

Unless you fully understand school fees plans and all the other options open to you, it’s best to get financial advice. An adviser might be able to find you a more cost effective investment. See Do you need a financial adviser?

How to buy a school fee plan

You can buy a school fees plan directly from a specialist school fees company or through an independent financial adviser – see Choosing a financial adviser.

Last reviewed: 12/06/2017

This content has been provided by the Money Advice Service