By Emma Simon, personal finance correspondent of the Press Association TERM time is here again. For parents who chose pay for their children's schooling this can be an expensive time of year, as the cost of educating just one child outside the state system has risen sharply.

Figures from last year show it costs an average of £4,052 a term to attend a boarding school, and £1,722 a term to send a child to a private day school.

Considering that most of these children will have attended a prep school from the age of eight, parents could be facing a bill in excess of £300,000 to send two children through a private education.

Few parents can afford to meet these kind of bills out of their monthly pay cheque. But financial planning can be the key to ensuring you have enough money to pay for your child's education.

The trick is to start early. Bruce Wilson, managing director of financial advisers' Chantrey Financial Services says: "People cannot start saving too early. The sooner they can lock money into a savings or investment scheme the bigger the returns will be."

He adds: "As soon as couples have children they should start an investment strategy if they are planning to pay for school fees."

Parents are faced with a number of investment options.

Many schools run their own payment schemes. Parents will be asked to pay a lump sum in advance or regular savings. This money is then invested in a high interest account to produce a guaranteed return by the time their child is eligible to start school. Most of these schemes are charitable trusts offering parents tax advantages, but according to financial advisers DBS these schemes do have drawbacks.

Sue Lewis, a spokeswoman for DBS says: "While they can guarantee an amount of money, they cannot guarantee that this will be enough to pay the school fees - which might have rocketed over this period. Parents should not think paying into one of these schemes guarantee a place at the school - your child may still have to pass the relevant entrance exam."

She adds: "These schemes can be inflexible, providing a poor surrender value if the child is educated at another fee paying school, wins a scholarship or goes to a state school."

Martin Jones, a financial planning partner at accountants, Blick Rothenberg says: "We would always advise against these conventional schemes because they are so inflexible."

Instead he recommends a more general savings or investment fund. He says: "Saving to pay for school fees is no different from any other long term savings plan, such as investing for retirement. "It is impossible to know exactly how much you will need, or how your circumstances might change so it is important to look for a flexible product."

He advises parents not to be lured by the "tax advantages" of some school schemes - instead save through Tessas, Peps and National Savings Certificates and you won't pay any tax at all.

First on the list should be Tessas (Tax-Exempt Special Savings Accounts). These are five-year plans which enable you to invest either a lump sum, or a regular amount of money in a high interest bank or building society account.

The maximum anyone can invest is £9,000 over five years, so between two parents this is £18,000 tax free to put towards school fees.

Anyone interested in Tessas should invest now, as these will only be available until next April.

Mr Jones also recommends National Savings Certificates, and for the more adventurous a personal equity plan.

Personal Equity Plans, or Peps, enable savers to invest up to £9,000 in the stock market - and again profits are tax-free. Most private investors generally buy into a collective fund, which is invested in a wide range of company shares - less risky than throwing all your money at one company. There are two main types of fund - investment trust and unit trusts, both of which are "peppable".

Mr Jones recommends a unit trust as it is generally considered less risky, although the returns may not be as high.

Anyone serious about investing in a Pep should remember that any venture into stocks and shares should be regarded as a long term investment.

Next year both Peps and Tessas will be axed to make way for the new Individual Savings Account - or Isa.

These will enable consumers to save cash deposits in an high interest accounts, like a Tessa and invest in shares like a Pep.

Aside from these tax free products, M

r Wilson - of Chantrey Financial Services - also recommends that anyone with ten years or more to build up funds should look at an endowment policy. These are offered by life insurance companies.

Parents can invest in a series of endowment policies, each of which can be fixed to mature when termly bill are due.

But some advisers suggest that even these policies, which are often used to pay off a mortgage, are too complicated. If circumstances change, parents could find they are unable to keep up the regular payments, which means the policy has to be surrendered, often for very little money. School fees are a financial burden for many parents at present. But many parents may be looking at these investment products in future - to pay for university fees.

With the with the introduction of tuition fees and the abolition of local education grants, many parents will be paying significantly more towards their child's higher education.

Recent research shows four our of five parents expect to shoulder most of the cost of sending a child to university - but few are financially prepared for to meet these costs. Some of these products may provide a helping hand.

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