School fee funding options in the UK

Updated

Dec 13, 2025 6:18 PM

Written by Nathan Cafearo

Practical ways to fund UK school and university fees, with costs, risks, and reliable steps to decide what suits your family budget.

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Paying for Education Without the Panic

Rising education costs concentrate the mind. From January 2025, private school fees carry 20% VAT, increasing term bills for many families. At the same time, state school funding has continued to improve via the National Funding Formula, with per-pupil funding reaching £8,210 in 2025-26 and projected to rise in real terms to around £8,800 by 2028-29. For higher education, maintenance loans have increased by 3.1% for 2025-26, targeted grants return for the lowest income households, and overall student support now totals billions each academic year.

Understanding APR is not just about percentages - it is about what you will pay and when. This guide sets out the main ways UK households can plan for school and university costs, weighing interest, flexibility, and eligibility. We also highlight where the strengthened state sector may ease pressure if private fees feel less viable.

Kandoo is a UK-based retail finance broker. We help you compare personal loans from multiple lenders, so you can see real costs before you commit. Whether smoothing a one-off admission bill or creating a predictable monthly plan, the right finance is the one you can comfortably afford over time.

Education decisions should start with the budget you can sustain in a typical month, not the best month.

Who Will Find This Useful

Parents weighing private versus state education amid the new VAT policy. Families exploring bursaries, scholarships, and fee payment plans. Students and parents planning for university maintenance, including the 3.1% loan uplift and reintroduced grants for the lowest incomes. Anyone comparing a personal loan with remortgaging, savings drawdown, or short-term instalment options. If you need clear costs, plain-English steps, and lender-neutral guidance, this is for you.

Funding Paths You Can Consider

Personal loan via a broker like Kandoo for fixed monthly repayments.
School payment plans or monthly instalment providers.
Bursaries, scholarships, or fee remissions from schools.
Remortgage to spread costs over a longer term.
Secured homeowner loan for larger sums.
Savings drawdown or Premium Bonds cash-in.
Family support, gifts, or intergenerational planning.
State sector option if private fees become unaffordable.
University finance: maintenance loans, targeted grants, and childcare support.

What It Costs and What It Means

Option	Cost	Impact	Potential Returns	Key Risks
Personal loan	Fixed APR, arrangement fees possible	Predictable monthly outgoings	Protect investments, avoid remortgage costs	Higher APR than secured options if credit weaker
School instalments	Admin fee or provider interest	Aligns payments with income cycles	Keeps liquidity for emergencies	Missed payments may trigger penalties
Bursaries and scholarships	No repayment	Significantly lowers overall fees	Long-term savings on total cost	Strict criteria, limited availability
Remortgage	Product fees, legal costs, new rate	Lowers monthly cost via longer term	Potentially lower interest rate	Securing against home increases repossession risk
Secured loan	Variable APR, broker fees	Larger borrowing capacity	Flexibility on term length	Home used as security increases risk
Savings drawdown	Opportunity cost only	No debt, immediate certainty	Avoids interest altogether	Reduces rainy-day fund and investment growth
Family support	Usually interest-free	Preserves cash flow	Tax-efficient gifting if planned	Relationship pressures, documentation needed
State sector switch	No tuition fee	Frees budget for enrichment	Better funded classrooms over time	Transition and availability vary locally
University finance	Income-contingent repayments	Protects student cash flow	Grants do not need repayment	Threshold freezes can limit eligibility

Who Qualifies and When It Matters

Eligibility varies. Personal loans depend on credit history, affordability checks, and UK residency. A broker like Kandoo can present multiple lenders in one place, improving your chance of finding terms that fit your budget without multiple hard searches at the outset. School instalment plans rely on the school or provider’s criteria, often including credit checks and a clean payments record. Bursaries and scholarships are need or merit based, with deadlines and evidence requirements.

For higher education, English-domiciled students can access maintenance loans, with a 3.1% uplift in 2025-26 and full support for households around £25,000 or less. Targeted maintenance grants return for the lowest-income households in 2025, reducing the need to borrow. Childcare support has grown in recent years, and overall student funding now reaches millions of learners. For families choosing the state sector, funding is determined centrally then distributed locally via the National Funding Formula, which considers pupil needs. Understanding local authority allocation helps set realistic expectations on class sizes, support, and resources.

Step-by-step: From Idea To Decision

Map total annual fees and essential living costs.
Check income stability and three-month cash buffer.
Explore bursaries, scholarships, and school instalments first.
Compare personal loans and secured options by APR and term.
Stress-test affordability at two percentage points higher.
Review university loans, grants, and thresholds for students.
Consider state sector quality and local admissions timelines.
Finalise and set up automated payments and reviews.

Weighing It Up

Aspect	Pros	Cons
Predictability	Fixed repayments simplify monthly budgeting	Less flexible if income varies
Speed	Personal loans can fund quickly	Faster funding may tempt over-borrowing
Cost control	Bursaries and grants reduce total outlay	Limited places and strict criteria
Security	Unsecured borrowing avoids risking your home	Rates may be higher than secured borrowing
Long term	Remortgaging spreads cost affordably	Paying interest over longer terms increases total paid
Flexibility	Savings avoid debt and interest	Erodes emergency and investment capacity

Read This Before You Commit

Private school fees now include VAT, so model the full annual impact rather than a single term. Include travel, uniforms, trips, music tuition, and exam charges. For loans, compare total repayable, not just the APR, and stress-test for rate changes on any variable or secured borrowing. Assess how state school funding is improving locally, as better resourcing may narrow the gap in facilities that once justified private fees. For university, note that maintenance loans are rising and targeted grants are back for the lowest incomes, but frozen thresholds can limit who qualifies. Keep paperwork organised for bursary assessments and always align the term of any borrowing with how long you benefit from the education.

Alternatives If Your First Choice Falls Through

Negotiate staged fee payments or early-payment discounts.
Consider a shorter private phase, then move to the state sector.
Use a smaller personal loan supplemented by savings.
Seek employer education support or salary sacrifice options.
Explore nearby state schools with strong inspection outcomes.

Common Questions

Q: How does the new VAT on private school fees change affordability? A: A 20% VAT applies from January 2025. Model term-by-term costs, including any extras, and compare with improved state sector funding levels locally.

Q: Are personal loans cheaper than remortgaging? A: It depends on your rate, term, and fees. Remortgaging can lower monthly costs but may raise total interest and is secured against your home.

Q: What student finance changes should families know for 2025-26? A: Maintenance loans rise by 3.1%, maximums vary by living situation, and targeted grants return for lowest-income households. Loans will track inflation annually.

Q: Will state schools have capacity if more switch from private? A: No immediate surge has been seen. Funding is distributed via local formulas that reflect pupil needs, and many areas report adequate capacity, especially in primary.

Q: How do I compare loan offers fairly? A: Focus on total repayable, monthly cost, fees, and early repayment terms. Stress-test your budget and consider the impact if rates increase.

Q: Can Kandoo help if my credit history is thin? A: As a broker, Kandoo can present options from multiple lenders. Eligibility depends on lender criteria, but a broader search can improve your chances of approval.

Ready To Move Forward

If you are considering a personal loan to manage fees, Kandoo can help you compare lender options side by side, see real monthly costs, and apply online in minutes. We keep it clear, measured, and focused on affordability so you can choose with confidence.

Important Information

This guide is general information, not advice. Eligibility and rates depend on individual circumstances and lender criteria. Secured borrowing risks your home. Always consider independent financial advice where appropriate.