Mon, 14 Aug 06
An increasing number of parents are borrowing money to fund their children's education a new report has revealed.
In the last year, the number of applications for personal loans to cover school fees has risen by 38%, the Sainsbury's Bank study found.
Loans manager at Sainsbury's Bank, Steven Baillie, commented: "We expect to see a growing number of parents taking out loans to help pay for their children's education."
"Those parents doing this need to make sure that they shop around and find a competitive loan rate."
The increase is seen as being a result of the 15% rise in household expenditure on school fees in recent years, as demonstrated by government data on the issue.
In 2004/05, total household expenditure on education fees was an estimated £7.876 billion, compared with £6.860 billion for the period 2001/02.
However, on a regional basis, London households on average spend the most of education fees and those in the East Midlands the least.
Households by location | Average spend on school fees per household between 2002/3 – 2004/5 |
London | £577.2 |
South East | £384.8 |
South West | £301.60 |
East | £280.80 |
Yorks & Humberside | £249.60 |
North West | £208.00 |
Scotland | £187.20 |
Wales | £176.80 |
North East | £166.40 |
West Midlands | £156 |
East Midlands | £140.40 |
United Kingdom | £275.60 |
For those people taking out personal loans to help cover the cost of education fees, Sainsbury’s Bank says that it is important to shop around for a competitive loan because it could save them hundreds of pounds in interest repayments.
Steven Baillie said: "Around 620,000 children are now privately educated in schools, which are consistently charging more in fees. The average fee increase in 2005-2006 was 5.7% and since 1999, they have risen by around 50%. Given this, and the fact that more children are being privately educated, we expect to see a growing number of parents taking out loans to help pay for their children’s education."
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