Private school parents will use credit cards, loans and remortgage homes to cope with VAT increase

Cash-strapped parents hit by Labour’s VAT raid on private school fees plan to use credit cards, loans and even remortgage their homes or sell properties to cover the extra cost, research has found.

Today, nine out of ten parents can finance their children’s education through salaries and investment income.

But once the Government slaps a 20 per cent VAT on fees, in what has been called an “act of class warfare”, up to 27 per cent of parents are likely to fall short of their expectations and many They are likely to take on additional debt. according to research by specialist lender Pepper Money.

Of those, 41 percent plan to turn to unsecured debt: 23 percent through credit cards and 18 percent through additional personal loans.

Almost a third plan to raise money from property: 13 per cent remortgage, 12 per cent arrange a homeowner loan and 7 per cent sell an asset.

And about 19 percent are willing to sign a funding agreement with their school, while 16 percent plan to use gifts from family.

Ryan McGrath, junior mortgage director at Pepper Money, says: “The fact that 23 per cent of parents are planning to use credit cards highlights how immediate this burden is, but also raises concerns about financial health. in the long term, since credit card debt can accumulate quickly with high interest rates.

He adds that the figures for remortgage or property sale plans “show to what extent families are going to guarantee the education of their children, uprooting the entire family in some cases.”

Mr McGrath says: “The pressure to keep children in the schools where they are already based is immense, and 70 per cent of parents are determined to find a way to cover the rising costs.”

The research involved 2,000 parents of private school children, but if reflected across society, it could mean up to 84,000 cash-strapped parents turning to credit cards to finance their children’s education.

The survey, which also used data from the Independent Schools Council, found that more than one in seven parents (15 per cent) will stop sending their children to private schools because of the cost of VAT.

Currently, 34 percent of parents finance school expenses using credit cards or unsecured loans, 16 percent use a home loan or remortgage, 13 percent use gifts from family, and 15 percent get a scholarship