MIDDLE CLASS parents are being forced to take out loans to fund school fees as the credit crunch bites.

As many as 18,000 people took out loans to cover education costs last year, according to research from Sainsbury’s Finance, and it expects the figure to be higher this year as families struggle to cope with a sharp rise in the cost of living.

School fees rose by an average of 6.2 per cent last year to £11,250, according to the Independent Schools Council – more than double the official rate of inflation.

Day schools now cost an average of £9,069 while boarding school would set a family back a staggering £22,059.

The fee increases come on top of double-digit rises in food and fuel, which are all conspiring to squeeze family finances.

Over the past decade remortgaging or drawing against the equity in a family home was one of the most popular ways to pay for school fees, thanks to rising house prices.

However, this has become more difficult as the property market has turned down, with lenders reluctant to let people borrow more than 75 per cent of their home’s value. Families are therefore being forced to fall back on personal loans.

Sainsbury’s said loans taken out last year totalled around £165m with an average value of £9,065.

Its analysis of government data suggests that in 2006, the latest year for which statistics are available, total UK spending on education fees was nearly £9 billion, compared with an average of £6.7 billion between 2002-3 and 2004-5.

Steven Baillie, head of loans at Sainsbury’s Finance said: “A combination of a rise in the cost of living, more children going to private school and the cost of private education rising could lead to more parents taking out loans to help fund their children’s education.

“Parents need to make sure they are shopping around for the best loan rate available and not simply turning to their current account provider.”

Anecdotal evidence suggests some middle-class families have fallen behind with their fees, or have even been forced to pull children out of school, because of the credit crunch.

Philippa Gee of adviser Torquil Clark, which helps with school-fees planning, said: “I have spoken to several schools in my area of the West Midlands who are reporting a worrying increase in parents missing payments since the start of the credit crunch - some parents have even had to pull their children out of schools.”

The City of London School for Boys increased fees by just 2 per cent this year in anticipation of hard times among its core market of City professionals.

David Levin, headmaster, said: “I have encountered professionals who are saying they can't afford independent schools anymore and have opted for the local comprehensive instead. We expect the stresses will emerge at the end of this year.

“It is important that parents choose their school carefully and are aware of past fee increases, so they can plan for the future.”