Parents would have to save about £400 a month, from the birth of their child until he or she was 18, to cover private school fees out of their savings. It is clearly a tall order for many families.

It costs an average of £2,970 a term to send a child to a private day school, or almost £9,000 a year. Boarding is dearer, at £6,636 a term, according to the Independent Schools Council’s 2006 census.

These are only averages. The top schools in the country charge a lot more. Eton, for example, costs boarders about £8,000 a term.

You might be able to negotiate a discount of up to 6 per cent if you pay the fees upfront, or if you send a second child to the same school, but it is still very expensive.

Justin Modray of Bestinvest, an adviser, said: “We have calculated that parents should invest £400 a month for 18 years to cover the cost of a private secondary school, or £900 a month for a boarder. But that’s assuming fees go up 5 per cent a year and the investment grows by 7 per cent a year. It could work out more expensive — and that’s for just one child.”

Most parents pay school fees out of their everyday income because they were unable to save enough during their child’s early years, so it is sensible to do some housekeeping to make sure the family finances are efficient. Somebody with a £100,000 loan on the standard variable rate of 7 per cent would cut their monthly payments of £707 to £553 by moving to a discount deal at 4.45 per cent — freeing an extra £154 a month for school fees.

But there is only so much to be squeezed out of the family budget. Remember, too, that school fees are paid out of taxed income, so higher-rate taxpayers need to earn about £33,000 gross to fund boarding school fees of £20,000. Also, fees are rising faster than earnings so you could find yourself struggling in future.

Many parents therefore need to borrow to meet the cost of private education. One option is to take out a personal loan, but it usually makes more sense to arrange a bigger mortgage because the interest rates are lower and the payments are spread over more years.

For example, if you borrowed £10,000 on a mortgage rate of 5.5 per cent over 25 years, the monthly payments would be £61 and you would pay interest of £8,423.

If you took out a personal loan for the same amount, at 7 per cent over five years, the monthly payments would soar to £198. But the total cost of the loan would be £1,880.

If you go for the mortgage option, you need a flexible or an offset deal that allows the money to be drawn as and when the bills arise. If you opted for a standard home loan, you would have to release your equity in one chunk — and so pay interest on the full lump sum from the outset.

Northern Rock’s flexible loans allow you to make overpayments and then draw back the money when you need it. So, you could arrange a mortgage for £300,000 and immediately pay back the £75,000 in equity. You could then draw on the money to meet the school bills when they arise, so you would pay interest only on the amount you actually needed to borrow.

Northern Rock offers a range of flexible mortgages with fixed rates. The two-year fixes start at 4.89 per cent or you can fix for five years at 5.49 per cent. Woolwich’s offset deal charges 0.48 percentage points above Bank rate for the life of the loan, so the current rate is 5.48 per cent.