Private college dad and mom to make use of bank cards, loans and remortgage houses to fulfill VAT payment hike

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 property to cover the extra cost, research has found.

Nine in ten parents are currently able to fund their children’s education through wages and income from investments.

But, once 20 per cent VAT is levied on fees by the Government in what has been dubbed an ‘act of class war’, as many as 27 per cent of parents are likely to fall short and many are likely to take on extra debt, according to the research from specialist lender Pepper Money.

Put it on card: As many as 27% of parents with children at private school say they will use debt to cover their school fees, if the VAT increase leads to costs going up

Of those, 41 per cent plan to use unsecured debt – 23 per cent from credit cards and 18 pc via extra personal loans.

Nearly one third plan to obtain money from property, with 13 per cent remortgaging, 12 per cent arranging a homeowner loan and 7 per cent selling an asset.

And some 19 per cent are set to take out a finance agreement with their school, while 16 pc plan to use gifts from family.

Ryan McGrath, director of second charge Mortgages 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 it also raises concerns about long-term financial health, as credit card debt can accumulate quickly with high interest rates.’

He adds that the numbers remortgaging or planning to sell property ‘show the lengths to which families are going to secure their child’s education, by uprooting the entire family in some cases’.

Mr McGrath says: ‘The pressure to keep children in schools where they are already settled is immense, with 70 per cent of parents 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 as many as 84,000 cash-strapped parents turning to credit cards to finance their offspring’s education.

The survey, which also used data from the Independent Schools Council, found more than one in seven parents (15 er cent) will stop sending their child to private school altogether due to the VAT cost.

Currently, 34 per cent of parents fund school fees via credit cards or unsecured loans, 16 per cent use a homeowner loan or remortgage, 13 per cent use gifts from family and 15 per cent obtain a bursary or scholarship.