Secured Loans for School Fees: Funding Private Education in 2026

Can you take a secured loan to pay school fees?

Yes. School fees are a recognised loan purpose and are funded by most UK secured loan lenders without restriction. The funds can be used to pay one term, one year, or a multi-year forward payment to the school.

School fee planning has become noticeably more common since 20% VAT began applying to private school fees on 1 January 2025. ISC figures show average UK private school fees rose by around 23% between January 2024 and January 2025, with average day school fees now around £19,000 per year and boarding fees around £50,000 per year. For multi-child families, the annual outlay can exceed £100,000.

Why parents use secured loans rather than the school's payment plan

Most schools offer monthly or termly payment plans, but these typically come with restrictions — short term caps, higher interest rates, and maximum loan sizes that often fall short when covering multiple children or boarding fees.

A second charge mortgage offers a far more flexible alternative. With terms available from 5 to 40 years, monthly repayments can be structured to suit your budget, and the funds can be used to make a lump sum prepayment directly to the school — which is worth exploring, as some independent schools offer a discount of 2–7% for fees paid in advance, which can go some way to offsetting the interest cost of the loan.

For families with ongoing or staggered fee commitments, there is also an innovative alternative to the traditional lump sum secured loan — the Home Equity Line of Credit (HELOC), offered in the UK by Selina Finance. Rather than receiving a single lump sum, a HELOC gives you an approved credit facility secured against your property, from which you can draw funds as and when you need them — paying interest only on what you have actually drawn down. Selina's enhanced HELOC, relaunched in September 2025, offers flexible drawdown periods of two to five years with fixed credit limits during the drawdown phase, and no early repayment charges. This makes it an ideal solution for parents who want flexibility to draw funds each term or year rather than borrowing everything upfront — and can make school fee funding significantly more cost-effective for those with a clear repayment plan.

The trade-off with any secured borrowing is that total interest paid is higher over a longer term, and your home is used as security. We will always present all options clearly so you can make an informed decision that is right for your family.

Tax-efficient alternatives to consider first

Bare trusts holding equities, or Junior ISAs held in the child's name, can help build a fee fund tax-efficiently if started early enough. Grandparents making regular contributions towards school fees may benefit from the normal expenditure out of income exemption for inheritance tax purposes — a commonly used and effective strategy among higher-net-worth families, whereby regular payments made from income that do not affect the grandparent's own standard of living are immediately exempt from inheritance tax with no seven-year waiting period required.

Spousal income arrangements — splitting income between higher-rate and basic-rate taxpayers — can reduce the total tax burden on fee funding. This is general information, not tax advice; consult a qualified accountant or chartered financial planner before relying on any of these structures.

Bursaries and scholarships should be exhausted first. Most UK independent schools award bursaries on a means-tested basis covering up to 100% of fees for families that qualify.

How lenders assess affordability for school fees

Lenders treat school fees the same as any other personal expenditure for affordability — your income, existing commitments, and the new monthly payment must pass the lender's affordability and stress rate assessment in line with FCA lending rules.

Some lenders ask about the children's ages, since this affects how long fees will run for. The loan term does not need to match the fees term — most parents take a 15–20 year secured loan to keep monthly costs low and overpay when affordable.

Joint applications work well here, since school fee planning is often a household financial decision rather than one parent's.

Speed and what to bring

Typical completion in 2–4 weeks. If you are funding a specific term, start the application at least 6 weeks before the term begins.

You will need: school fee invoice or fee schedule, photo ID, proof of address, last 3 months' payslips or last 2 years' SA302s and accompanying tax year overviews if self-employed, last 3 months' bank statements, and your most recent mortgage statement.

Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it. Funding multi-year education commitments by borrowing against your home is a serious decision — ensure the affordability remains manageable even if your circumstances change.