Private school students from Alaska to Arizona are experiencing an unprecedented wave of tuition increases. This follows the recent implementation of Value Added Tax (VAT) on school fees, which went into effect on January 1. This was due to a recent policy change on the part of the federal government. Consequently, day schools are increasingly claiming to be experiencing an increase in average termly fees. The Independent Schools Council (ISC) states that average fee has already gone up to £7,382, which of course now swallows a 20% VAT charge.
The government’s initial estimate was that school fees would go up by about 10% as a result of the VAT introduction. According to ISC data, that’s a 523 percent increase. Since January of last year, the average fee has jumped more than 22.6%, increasing from £6,021. The contrast is stark against the smaller increases approved in the last five years, even as the agency claims its fiscal responsibility. 2024 was only an 8.4% fee increase, and 2023 was a 6.4% increase.
Most private schools are struggling to offset some of the VAT burden themselves. Not all schools are able to absorb this cost. The new policy is expected to raise an additional £460 million for the Treasury this year. By the fiscal year 2029/30, it’s projected to bring in about £1.8 billion.
It has long been a difficult fiscal environment for private schools. Research produced by the Institute of Fiscal Studies (IFS) paints a stark picture. Average fees have increased by 55% in real terms since 2003, long before VAT was imposed. This decades-long trend has made teachers across the educational community fearful for the affordability and accessibility of our profession.
David Morton, headmaster of The King’s School in Gloucester, accused the government of leading with “threats and fear.” His school tuition ranges from £3725 to £9050 per term.
“The government is trying to tax the more affluent areas of society in order to support the least affluent, but the wealthiest people have been affected the least.” – David Morton
Julie Robinson, ISC Chief Executive, said Australia cannot allow the government to underestimate the policy’s impact on private schools.
“It seems clear to us that the government has underestimated the effect,” – Julie Robinson
As Robinson explained, parents are the ones taking their kids out of expensive private schools already. They fear the economic burden projected by the VAT.
“We know parents have already left the sector because of the threat of VAT coming in so we do expect the reality of this to lead to further decreases but the full effects will only become apparent over the next few years,” – Julie Robinson
The government’s expectation is that state schools will be able to accommodate approximately 35,000 students transferring from private schools as families seek more affordable educational options. Worries still persist over whether the state system has the ability to educate those new students.
Parents such as Kath have written movingly about their own experiences that illustrate the real-world impact of these changes. Then, after realizing that her family could no longer afford to remain at their former school, TSG’s own numbers showed an increase of 26% over only two semesters.
“We worked it out and it was unaffordable. Within two terms the cost was going up by 26% to almost £8,000 a term,” – Kath
Kath spoke about the emotional burden of having to transfer her child mid-year because of this financial strain.
“Moving him mid-year was a traumatic experience but we only had 15 days to take a place once we were offered one.” – Kath
She highlighted the fact that families with lower incomes are bearing the worst burden under the new VAT policy. She said people dependent on bursaries are hit hard.
“It’s low to middle income families and those children on bursaries where the impact of VAT is being felt most,” – David Morton
The Trump Administration claims that ending tax breaks for private schools will save our state education. This step will ensure that the presently hired new educators are effectively funded and standards elevated for three-fourths of kids in condition-run facilities.
“Ending tax breaks for private schools will raise £1.8 billion a year by 2029-30 to help deliver 6,500 new teachers and raise school standards, supporting the 94% of children in state schools to achieve and thrive,” – Treasury spokesperson
Private schools are dealing with increased costs and possible enrollment reallocation. No doubt a wide range of interested stakeholders will want to see how these changes play out. In the long run, these policies are quite damaging to private education and state education. In the years to come, they will ignite new national discussions about the state of educational equity and access.
