Means-Tested Bursaries for Independent Schools – A Sustainable Proposition

The relentless and sustained real terms increase (well above inflation) in independent school fees over the last 40 years has created a growing issue of affordability. Fees today are approximately 3-4 times as expensive in real terms as they were in the 1980s.

This has had a clear impact upon affordability but for many years it was not apparent in the context of the increasing demand for independent education. The fact that the economic demographic of parents was changing (with wealthier parents replacing those of more modest means) was of little interest to the majority of schools provided that they were filling places. Now chickens are coming home to roost. Schools are (albeit belatedly in some cases) recognising that they have a moral duty to be as diverse and accessible as possible, perhaps prompted by the growing evidence that there is a limited marketplace of those able to afford full fees. This has been exacerbated by the economic impact of Covid, which has fallen disproportionately on the self-employed, many of whom are in favour of independent education for their children.

Given that across the board cuts in fees are not practical an alternative option is to create more means tested bursaries, which would make it easier for schools to remain full (an entirely reasonable aspiration) whilst also increasing diversity and accessibility. Moreover, there are very few schools which do not have four or five places unfilled in each year group, so the cost implications of filling these with bursaries would be minimal and would (unless they were 110% bursaries) also increase income.

Means tested bursaries have already proved themselves effective in increasing diversity, but many schools have ‘latched on’ to the concept of only providing full bursaries without fully considering the longer term implications, not only in terms of cost but socio-economic impact and sustainability of the schools themselves.

Whilst the obvious long-term sustainable solution to funding bursaries is to build a bursaries endowment, this is easier said than done. Many potential donors are resistant to the concept that they should contribute money for an organisation to ‘sit on’, and spend only the interest, while the capital builds. With the current low interest rates very substantial amounts of capital are required. A full fee day place of, say £18,000 pa would require a capital sum of at least £660,000 (assuming a 3% return) to fund a 110% bursary.  Moreover because it normally takes a considerable time to build an endowment large enough to make any meaningful annual disbursements it is, in our view, essential also to raise funds for use as short term (eg five year) bursaries while the endowment is building.

The emphasis on schools offering full bursaries (or 110% bursaries, to fund associated costs such as trips, uniform etc)  is because these are perceived as being likely to have the most impact, as well most likely to maximise interest amongst potential donors. In our experience neither is the case. Firstly, because the number of full bursaries is, of necessity (i.e. affordability) normally very low, the impact upon a school community is often equally low, although the impact on the few individuals benefiting is very substantial. For example 10 full bursaries will make relatively  little  difference to the socio-economic ‘mix’ at a school of say 600 pupils, compared to 20 half bursaries, or 40 quarter bursaries, both of which options could be funded at the same cost. Of course, schools should be able to offer some full bursaries, but it is the overall quantum of bursaries (especially in the 50% – 110% range) which will start to bring about a perceptible change in the economic and social demographic. Full bursaries also bring significant additional costs and issues, such as the challenges of identifying and attracting prospective pupils who qualify (ie through means testing) for full bursaries, or the additional cost of mentoring and supporting them through school and often through university.

Secondly, current fee levels do not exclude just those of very limited means, but many with earnings substantially above national average salary; the middle income earners on whom most independent schools have in the past depended for the majority of their pupil intake and will do so in the future. To put this into context, a parent with sufficient income to fund 3 siblings at an independent day school in the 1970s would probably struggle to fund more than one at today’s fees.

Focusing only on 110% bursaries would simply replicate the current regrettable situation in many private  schools in the US (where bursaries provision has largely been funded from fee income with the inevitable upward pressure on fees), with two main groups of pupils benefitting; the children of the very rich (whose parents can afford the fees however high they may be) and those of the very poor, funded by bursaries, with the middle income group gradually being squeezed out, with the consequent inevitable narrowing of social and economic diversity.

One may question why families on very comfortable incomes, of say £70,000 -£80,000 pa, but who cannot afford the current levels of fees (£15,000 + pa for a day place and £28,000 + pa for a boarding place) should have help, when they are far better off than most? The fact that should concern independent schools is that, if even people with substantial incomes have been priced out of independent education, then surely this, in the medium to long term, if not in the short term, poses a serious existential threat to at least some independent schools? There are simply not enough families wealthy enough to enable all schools to be sustainable. Hence the need for a broad range of means tested bursary provision, from 25% to 110%, with a rigorous and strictly enforced set of protocols to prevent the cheating that was so rife under the Assisted Places Scheme. This will help to ensure schools remain sustainable in the long term, while enabling the breadth of social and economic diversity that benefits all pupils and schools and, in due course society at large.

Thus our view is that, in order to be sustainable in the medium to long term and to have a meaningful and incremental impact on access and diversity, schools need to base their bursaries strategy (and thus their funding strategy) on offering a range of bursaries from 25% up to 110% based on rigorous and transparently fair means testing and assessment, with 2 ‘pots’; one for short term (e.g. 5 year) funding) for spending as resources become available, and one for endowment.

Obviously the proportion of bursaries at each level and the division between short term and endowment funding is a matter for individual schools and will depend upon factors such as current socio-economic make-up, future aspirations and of course the quantum of funding that can be raised. In our experience it is essential that any strategy or targets set are as flexible as possible at the outset, to enable them to be adapted in response to actual progress ‘on the ground’, without loss of credibility.

Mark Jefferies has more than three decades of experience working with independent schools. He advised on the first £10m School campaign for bursaries (at Manchester Grammar School) and devised and co-ordinated the National Bursaries Campaign for the Girls Public Day School Trust  (now the Girls Day School Trust) which was run through the Trust’s (then) 26 schools.

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The relentless and sustained real terms increase (well above inflation) in independent school fees over the last 40 years has created a growing issue of affordability. Fees today are approximately 3-4 times as expensive in real terms as they were in the 1980s.

This has had a clear impact upon affordability but for many years it was not apparent in the context of the increasing demand for independent education. The fact that the economic demographic of parents was changing (with wealthier parents replacing those of more modest means) was of little interest to the majority of schools provided that they were filling places. Now chickens are coming home to roost. Schools are (albeit belatedly in some cases) recognising that they have a moral duty to be as diverse and accessible as possible, perhaps prompted by the growing evidence that there is a limited marketplace of those able to afford full fees. This has been exacerbated by the economic impact of Covid, which has fallen disproportionately on the self-employed, many of whom are in favour of independent education for their children.

Given that across the board cuts in fees are not practical an alternative option is to create more means tested bursaries, which would make it easier for schools to remain full (an entirely reasonable aspiration) whilst also increasing diversity and accessibility. Moreover, there are very few schools which do not have four or five places unfilled in each year group, so the cost implications of filling these with bursaries would be minimal and would (unless they were 110% bursaries) also increase income.

Means tested bursaries have already proved themselves effective in increasing diversity, but many schools have ‘latched on’ to the concept of only providing full bursaries without fully considering the longer term implications, not only in terms of cost but socio-economic impact and sustainability of the schools themselves.

Whilst the obvious long-term sustainable solution to funding bursaries is to build a bursaries endowment, this is easier said than done. Many potential donors are resistant to the concept that they should contribute money for an organisation to ‘sit on’, and spend only the interest, while the capital builds. With the current low interest rates very substantial amounts of capital are required. A full fee day place of, say £18,000 pa would require a capital sum of at least £660,000 (assuming a 3% return) to fund a 110% bursary.  Moreover because it normally takes a considerable time to build an endowment large enough to make any meaningful annual disbursements it is, in our view, essential also to raise funds for use as short term (eg five year) bursaries while the endowment is building.

The emphasis on schools offering full bursaries (or 110% bursaries, to fund associated costs such as trips, uniform etc)  is because these are perceived as being likely to have the most impact, as well most likely to maximise interest amongst potential donors. In our experience neither is the case. Firstly, because the number of full bursaries is, of necessity (i.e. affordability) normally very low, the impact upon a school community is often equally low, although the impact on the few individuals benefiting is very substantial. For example 10 full bursaries will make relatively  little  difference to the socio-economic ‘mix’ at a school of say 600 pupils, compared to 20 half bursaries, or 40 quarter bursaries, both of which options could be funded at the same cost. Of course, schools should be able to offer some full bursaries, but it is the overall quantum of bursaries (especially in the 50% – 110% range) which will start to bring about a perceptible change in the economic and social demographic. Full bursaries also bring significant additional costs and issues, such as the challenges of identifying and attracting prospective pupils who qualify (ie through means testing) for full bursaries, or the additional cost of mentoring and supporting them through school and often through university.

Secondly, current fee levels do not exclude just those of very limited means, but many with earnings substantially above national average salary; the middle income earners on whom most independent schools have in the past depended for the majority of their pupil intake and will do so in the future. To put this into context, a parent with sufficient income to fund 3 siblings at an independent day school in the 1970s would probably struggle to fund more than one at today’s fees.

Focusing only on 110% bursaries would simply replicate the current regrettable situation in many private  schools in the US (where bursaries provision has largely been funded from fee income with the inevitable upward pressure on fees), with two main groups of pupils benefitting; the children of the very rich (whose parents can afford the fees however high they may be) and those of the very poor, funded by bursaries, with the middle income group gradually being squeezed out, with the consequent inevitable narrowing of social and economic diversity.

One may question why families on very comfortable incomes, of say £70,000 -£80,000 pa, but who cannot afford the current levels of fees (£15,000 + pa for a day place and £28,000 + pa for a boarding place) should have help, when they are far better off than most? The fact that should concern independent schools is that, if even people with substantial incomes have been priced out of independent education, then surely this, in the medium to long term, if not in the short term, poses a serious existential threat to at least some independent schools? There are simply not enough families wealthy enough to enable all schools to be sustainable. Hence the need for a broad range of means tested bursary provision, from 25% to 110%, with a rigorous and strictly enforced set of protocols to prevent the cheating that was so rife under the Assisted Places Scheme. This will help to ensure schools remain sustainable in the long term, while enabling the breadth of social and economic diversity that benefits all pupils and schools and, in due course society at large.

Thus our view is that, in order to be sustainable in the medium to long term and to have a meaningful and incremental impact on access and diversity, schools need to base their bursaries strategy (and thus their funding strategy) on offering a range of bursaries from 25% up to 110% based on rigorous and transparently fair means testing and assessment, with 2 ‘pots’; one for short term (e.g. 5 year) funding) for spending as resources become available, and one for endowment.

Obviously the proportion of bursaries at each level and the division between short term and endowment funding is a matter for individual schools and will depend upon factors such as current socio-economic make-up, future aspirations and of course the quantum of funding that can be raised. In our experience it is essential that any strategy or targets set are as flexible as possible at the outset, to enable them to be adapted in response to actual progress ‘on the ground’, without loss of credibility.

Mark Jefferies has more than three decades of experience working with independent schools. He advised on the first £10m School campaign for bursaries (at Manchester Grammar School) and devised and co-ordinated the National Bursaries Campaign for the Girls Public Day School Trust  (now the Girls Day School Trust) which was run through the Trust’s (then) 26 schools.