Parents at Sir Keir Starmer's Former School Forced to Seek Loans to Cover VAT Tax Hike
Parents at Reigate Grammar School, where Sir Keir Starmer received a bursary, have been forced to resort to loans to cover the financial burden imposed by the Labour government's VAT tax increase on private school fees.
Loan Providers Witness Surge in Applications
Loan providers report a significant increase in loan applications from cash-strapped parents, with some loans featuring interest rates as high as 16.9%. Credit applications across the UK have increased by 40% in the past month.
The School Fee Plan
The School Fee Plan, a financial services subsidiary, provides flexible loans to parents struggling to meet school fee expenses. These loans, offered at an interest rate of 6.5%, are designed to be repaid over 12 months. For parents covering the increased costs of two children, the transaction fees alone would amount to £1,900.
The company has seen a 40% increase in the number of parents seeking loans to cover school fees, with website traffic doubling compared to last year.
Novuna Expands into Private School Loan Market
Credit provider Novuna plans to launch a private school loan service in September 2023, allowing parents to finance school fees in full or just the VAT increase, with repayment terms ranging from three to 12 months. Novuna's interest rate of 16.9% is considered competitive in the market.
No Recourse Model
Novuna emphasizes its "no recourse model," meaning that the loan company will assume the responsibility of dealing with parents who experience financial difficulties, rather than the school. This model is designed to prevent children from being denied access to education due to parental financial issues.
School Fee Plan Statistics
The School Fee Plan reports a 73% immediate approval rate for loan applications, increasing to 90% with additional information.
Government Response
Neither the government nor Reigate Grammar School has yet responded to requests for comment on this matter.