One of the first posts I ever wrote on this blog was about the true cost of private schools.
The year was 2019, and I was staggered to calculate the “all-in” cost of private school at anywhere between £800k and £2.7m:
To date, it remains one of the most popular and commented-on posts on this blog. No wonder, given the importance of education and the immense sums involved!
And yet, when our daughter started school in September 2021, we ended up going the private route. As such, I felt my post was due for a refresh, and an explanation for why we made that decision.
I vividly remember walking our little girl to school on her first day – incredibly happy, yet somewhat apprehensive.
Did we make the right decision? Would I regret it down the road?
With the summer term well underway, we are almost a year into the journey. In today’s post, I am going to share some observations on our experience so far.
I hope it will help those readers who are contemplating what is likely going to be the biggest financial decision of their lives.
In particular, I want to highlight a couple of aspects that you should diligence before signing on the dotted line as they can really make or break the experience.
The one big and obvious disclaimer I need to put out here is that I have no basis for reference.
I went to a state school myself, but that was 25 years ago in a different country.
And even if I had one child in each camp (state and private), it would still not be a perfect comparison given each child is unique.
In an ideal scientific study, you put the same child through both systems and compare notes and ultimate outcomes – but we live in the real world here, not an ivory tower.
In other words, take my thoughts for what they are – a one-sided perspective of one particular parent.
With that in mind, let’s kick off.
Private Schools: The Financials
At our school, the term fee is roughly £7,500, bringing the total for the year to £22,500 (about $28k USD).
The fees include all stationery, lunches, etc but exclude uniforms.
On that last point, we kind of expected to spend an arm and a leg, being a captive audience and all that.
However, we were pleasantly surprised by the active market in second-hand uniforms and were able to pick up quite a few items on the cheap.
Girls grow quickly and most of the items are barely used.
In addition to headline fees, there are some minor ancillary costs (a few trips and other events) but those are very reasonably priced, at least in the context of the tuition fee. I would, however, expect that the number and cost of the trips will increase as the girls get older.
All in, I would say the total cost comes to about £23,000 for the upcoming year.
Incidentally, this reflects about a 7% increase from last year. Talk about inflation!
As it happens, many of the private schools in the UK are now owned by private equity.
Now, I typically don’t mind private equity as asset owners. They do tend to manage businesses fairly well.
However, most of them have a 3-5 year holding horizon. As a result, their objectives are not necessarily aligned with those of your child, who will be at the school for far longer.
In addition, you want management focused on running the school, not preparing it for yet another change of ownership every couple of years.
Most importantly, private equity ownership implies a focus on financial returns, ideally in the 15%+ range, which obviously impacts the way your tuition money is being spent.
We’ve been lucky enough to find a great school that’s structured as a non-for-profit. Given this setup, all fees are spent for the benefit of the school and students, not third-party shareholders.
Now, I am not blind to the fact that non-for-profits are often less well managed than private enterprises.
That being said, there’s a strong governance framework in place and a great headmistress who really has a solid grasp on what it takes to run a top educational institution.
When choosing a school, I’d recommend you spend some time investigating the ownership and governance aspect. It will likely influence the way the school is managed and the outcomes it delivers.
You also want to find out whether there’s an active parent-teacher association. A well-functioning PTA is a great way to ensure the parents have appropriate input into the governance of the school.
Having said that, let’s move on to:
Private Schools: The Academics
Like many other independent schools, ours is exempted from the state curriculum, which allows the school to go above and beyond.
Now, I am not a professional educator, so it’s tough for me to pass judgment on the curriculum itself.
Our daughter turned five not long ago and yet she can read, write, and do reasonably advanced (for her age) maths – which seems like a good place from where I sit.
There is some homework involved, but not a lot. A bit of reading and spelling during the week, and about 30 mins of homework for the weekend.
The teachers are very accessible both in person and via email.
Classroom size is in the high teens, which seems to work well but I wouldn’t want it to go north of 20.
Finally, it doesn’t look like there’s a culture of tutoring kids over and above the classroom. I think there are one or two parents who do it, but it is not (yet) a widespread phenomenon.
Girls vs Boys
Another decision you will have to make that relates to the curriculum is the choice between a single-sex or a co-ed school.
Given our younger child is a boy, a co-ed school would be preferable. Nothing like the hassle of coordinating two different schools for your kids!
And yet, we ended up going with a girls-only school. One reason is that we just didn’t find any co-ed schools in our neighbourhood that we liked.
Another (and more important) reason is that girls do tend to develop in a different way from boys.
In the early years, boys tend to lag in terms of both concentration and motor skills. They obviously catch up down the road, but the perfect educational curriculum reflects those developmental differences.
As a result, we felt that girls may be disadvantaged by a co-ed curriculum, especially in the early years.
This is the part that’s easy to diligence upfront, at least as defined by secondary school admissions.
Most schools will proudly display their “exit results” for the 11+ examinations, albeit they like to present it in the most favourable light (kind of like investment banking league tables…)
You should obviously compare the results for the various schools you are contemplating.
Importantly, however, you should also see how the schools are trending over time. If the exit results have been getting worse, that’s probably a reason for further investigation.
Some schools will aggregate their results over a couple of years to mask a declining trend. That being said, you can always find out the information by reviewing other sources of information or talking to parents.
The last thing you ever want to do is to yank your child out of school halfway through the journey because the academics are not up to scratch, or a downward trend in the exit results.
As such, it is critical to put him (or her) in a stable or an improving environment in which they will thrive emotionally, physically – and academically.
Private Schools: The Social Aspect
One of my concerns about private school was ending up in a place where most parents are very wealthy.
For obvious reasons, I just didn’t want our daughter to normalize living in luxury mansions, wearing designer clothes, and flying private.
In our school, we do have a few people with that kind of wealth. The parent community includes a very famous athlete, a couple of actors/singers, and an odd billionaire.
That being said, they keep a low profile and are probably more worried about standing out themselves.
Everyone else can be characterized as the “working rich”. Lawyers, consultants, doctors, computer engineers, private equity professionals, and yes – fellow investment bankers.
Not necessarily a representative sample of the society, but most folks share an understanding of what it’s like to raise a family while both parents work intense jobs with long hours.
Not all schools are like that, and so I would encourage you to spend as much time talking to current and prospective parents as you can.
After a while, you’ll be able to get a good feel for the socioeconomic makeup of the school you are looking at, and decide whether it works for you.
There’s a somewhat contentious perspective out there that suggests that making friends with the “right” kids at school can somehow augment your child’s social (and economic) trajectory through life.
Perhaps it’s true – but in my mind, it is also utter madness to try and “friend” your child with someone for the sake of their socioeconomic advancement.
Thankfully, the parents at our school seem to share that philosophy. It’s a pretty open environment with everyone going to playdates with everyone, the whole class being invited to birthdays, etc.
The other aspect folks often bring up when it comes to the “network” is building professional relationships at the parental level.
There may well be a benefit here. Some of the fellow parents at school could be potential clients of mine.
That being said, as an investment banker I have never felt the need to befriend someone in such an artificial way.
If I want to secure a prospective client, I simply call on them. If there is rapport (and value to add), we build a relationship. If there isn’t – we move on.
In other words, I wouldn’t count on the school as a vehicle for your own professional advancement. There are better ways to spend your time and money.
The last aspect I want to mention in this post is the fact that private schools tend to have significantly longer holidays than state schools.
A week in the fall, a few weeks over Christmas, another week in February, a few more weeks in April.
And if you haven’t yet blown your annual vacation allowance, that whopper of a summer holiday will do it for you.
Yes, you can always put your child in a camp.
However, they aren’t cheap and they usually run for a portion of the day only, so you do need a contingency plan for those 10 am drop-offs and 2 pm pick-ups.
Make sure you’ve got a good plan in mind to address both the incremental costs and looking after the kids.
Private Schools: The Conclusion
As mentioned above, the observations above represent a one-sided perspective from one particular parent.
That being said, I hope it serves as a helpful reference framework from someone who is now firmly on the private school journey.
Feel free to ask any questions in the comments and I will try my best to help.
Good luck – and thank you for reading!
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Banker On FIRE is an M&A (mergers and acquisitions) investment banker. I am passionate about capital markets, behavioural economics, financial independence, and living the best life possible.
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