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Parents Cut Pensions and Investments to Pay Private School Fees
01 Sept 2026
New Rathbones research finds that higher education costs are forcing UK families to trade long-term financial security for school and university funding.
Rising private school fees are pushing many UK families to cut pension contributions, reduce investments and postpone other financial goals, according to new research from Rathbones.
The wealth and asset management group surveyed 1,010 UK parents and grandparents who currently contribute, or expect to contribute, towards private school fees or university costs.
Its new report, The family funding gap: How rising education costs are reshaping wealth across generations, shows that education is increasingly becoming a multi-generational financial challenge.
Among families paying private school fees, 22% say they have deprioritised ISAs and long-term investments. Another 20% have reduced pension saving.
At the same time, 36% have cut holidays and leisure spending, while 29% have postponed home improvements.
VAT Is Adding More Pressure
The introduction of VAT on private school fees has made the situation more difficult for some families.
Nearly one in four parents, 24%, say they have absorbed the higher costs but are now under financial strain.
Another 16% have delayed enrolling a child in private school, while 10% have moved, or plan to move, a child out of private education altogether.
Amanda Cook, Financial Planning Director at Rathbones, said the true cost of private education now extends well beyond school fees.
“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,” she said.
She added that the introduction of VAT has intensified those pressures, leaving some families to reconsider when, or whether, they can afford private education.
Education Is Becoming an Intergenerational Financial Issue
The report also points to a wider shift in how families fund education.
Parents and grandparents are taking on a greater share of university and school costs, turning education funding into part of long-term family wealth planning.
Among parents who currently contribute, or expect to contribute, towards university costs, 69% expect to fund at least half.
More than a quarter, 26%, expect to contribute over £50,000 per child. Meanwhile, 11% expect to contribute more than £100,000.
Almost half, 46%, say education costs are likely to affect their retirement planning.
Grandparents are also becoming more involved. Rathbones found that 65% of respondents expect grandparents to contribute towards education costs.
Family Wealth Is Playing a Bigger Role in Opportunity
Perhaps the most striking finding is how families view the link between education and wealth.
More than eight in ten respondents, 81%, believe rising education costs are making life chances increasingly dependent on family wealth.
That raises a broader question about access.
As private school and university costs rise, families with more financial resources can provide greater support, while others may have fewer options.
This is creating what Rathbones describes as a second education funding system, in which parents and grandparents increasingly bridge the gap between aspiration and affordability.
Education Is Reshaping Retirement and Estate Planning
The report also shows that education funding is becoming closely tied to retirement and inheritance decisions.
More than two-thirds of respondents, 67%, say upcoming inheritance tax changes affecting pensions increase their desire to fund education during their lifetime.
Ed Wood, Financial Planning Director at Rathbones, said families are increasingly having to balance education ambitions against retirement security and long-term investing.
“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,” he said.
He added that education funding should therefore form part of a broader financial plan rather than being treated as a separate expense.
A Growing Challenge for UK Families
The research suggests that education is becoming one of the more significant financial pressures facing middle- and higher-income families.
Parents are not simply deciding whether they can afford school fees today. They are increasingly weighing those costs against pensions, investments, housing, retirement and future wealth.
That creates a difficult trade-off.
The more families spend on education now, the less they may have available for long-term financial security later.
And as more grandparents become involved, the cost of education is increasingly becoming a challenge that spans several generations rather than one household.
About Rathbones
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 part of its report, The family funding gap: How rising education costs are reshaping wealth across generations.
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Sara Srifi
Sara is a Software Engineering and Business student with a passion for astronomy, cultural studies, and human-centered storytelling. She explores the quiet intersections between science, identity, and imagination, reflecting on how space, art, and society shape the way we understand ourselves and the world around us. Her writing draws on curiosity and lived experience to bridge disciplines and spark dialogue across cultures.
