• One in four families report financial strain from VAT-driven fee rises as new Rathbones report [https://tinyurl.com/25tcdcht] highlights the growing cost of educational opportunity

2 September 2026 | As families prepare for the start of a new academic year, new research from Rathbones, one of the UK's leading wealth and asset management groups, reveals that rising private school costs are forcing many households to sacrifice long-term financial security, cut spending and rethink education plans.

The findings, published in Rathbones' new report The family funding gap: How rising education costs are reshaping wealth across generations [https://tinyurl.com/25tcdcht], suggest parents are increasingly funding private education at the expense of their own long-term financial security, creating a growing 'double squeeze' between supporting their children's education and protecting their future finances."

Among families funding private school fees, more than one in five (22%) say they have prioritised ISAs and long-term investments less in order to afford education costs, while 20% have reduced pension saving. More than a third (36%) have cut back on holidays and leisure spending and 29% have postponed home improvements.

The introduction of VAT on private school fees appears to be reshaping family education decisions. Nearly one in four (24%) families say they have absorbed the higher costs but with financial strain, while 16% have delayed enrolling a child in private school and one in 10 (10%) have moved, or plan to move, a child out of private education altogether.

Amanda Cook, Financial Planning Director, based in Rathbones’ Bournemouth office, says: “As families prepare for a new school year, many are finding that the true cost of private education extends far beyond the school fees themselves. The pressure is forcing households to make difficult trade-offs, with some reducing pension contributions, scaling back investment plans and dipping into savings to fund educational opportunities."

"The introduction of VAT on private school fees has amplified those pressures. While many families have chosen to absorb the additional costs, a significant number are doing so with financial strain, while others have delayed enrolment or changed their schooling plans altogether."

Private school pressures are part of a wider education funding challenge

The private school findings form part of Rathbones' new report which explores how families are adapting to rising university and private education costs.

The report finds that education is increasingly becoming one of the UK's defining intergenerational financial planning challenges, as parents and grandparents take on a greater share of education funding.

Among the report's wider findings:

• Nearly seven in ten (69%) parents who currently contribute, or expect to contribute towards university costs, expect to fund at least half of the costs.

• More than a quarter (26%) expect to contribute more than £50,000 per child towards university costs, while 11% expect to contribute more than £100,000.

• Almost half (46%) say education costs are likely to affect their retirement planning.

• Nearly two-thirds (65%) say grandparents contribute, or are expected to contribute, towards education costs.

• More than two-thirds (67%) say upcoming inheritance tax changes affecting pensions increase their desire to fund education during their lifetime.

• More than eight in ten (81%) believe rising education costs are making life chances increasingly dependent on family wealth.

The report concludes that while Britain's faith in education remains strong, rising costs are increasingly requiring families to make difficult financial trade-offs and turning education funding into a challenge that spans multiple generations.

Rather than relying solely on student finance or institutional support, many parents and grandparents are increasingly acting as a second education funding system, bridging the gap between aspiration and affordability.

Ed Wood, Financial Planning Director, based in Rathbones’ London office, says: "The cost of education has become one of the defining financial planning challenges facing modern families. Parents and grandparents increasingly find themselves balancing educational ambitions against retirement security, long-term investing and broader financial resilience.

"Our research shows many families are funding educational opportunities by making sacrifices elsewhere, whether that's reducing pension contributions, drawing on investments or delaying other financial goals. That's why education funding should be considered as part of a wider financial plan rather than in isolation."

"We are also seeing education increasingly become part of intergenerational wealth planning. Many families would rather provide meaningful support when it can have the greatest impact, and with unused pension assets due to fall within the scope of inheritance tax from April 2027, the links between education funding, retirement planning and estate planning are becoming increasingly important."

ENDS

Notes to editors

Rathbones commissioned independent research among 1,010 UK parents and grandparents who currently contribute, or expect to contribute, towards private school fees and/or university costs for a child or grandchild. The findings form the basis of the The family funding gap: How rising education costs are reshaping wealth across generations [https://tinyurl.com/25tcdcht]

Further information, please contact:

Myron Jobson

Personal Finance, Senior Manager

Myron.jobson@rathbones.com

07508014552

Press team

press@rathbones.com

About Rathbones rathbones.com

Rathbones Group Plc (Rathbones) is one of the UK’s leading providers of investment and wealth management services for private clients (individuals and families), charities, trustees, and professional partners. Rathbones’ purpose is to help more people invest their money well, so they can live well.

With roots dating back to 1742, the company has been trusted for generations to manage, preserve and grow its clients’ wealth. Services include discretionary investment management, fund management, tax planning, trust and company management, financial advice and banking services. Rathbones also supports financial advisers in its aim to deliver positive outcomes for their clients.

Rathbones manages £120.7 billion* of client assets, including £16.3 billion through its asset management arm, Rathbones Asset Management Limited. A FTSE 250 company, Rathbones has over 3,300 employees, including over 700 investment professionals in 21 offices across the UK and the Channel Islands, offering clients high-quality, personalised wealth management services.

*As of 30 June 2026

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