PARENTS are struggling to meet school fee bills and resorting to personal loans, according to recent reports. Many parents, having taken the decision to pay for an independent education, will make every sacrifice they can to maintain that commitment. But when mortgage rates are rising and other domestic bills are soaring, finding the cash for school bills can be a challenge. However, with careful planning it is possible to get through it.

Without doubt, school fees will leave a large dent in the finances of most people, even those families with two salaries.

Once the decision has been made to opt out of state education, the hard work arises in ensuring that the funding strategy for paying school fees works as efficiently as possible. Many people are increasingly frustrated that school fees are paid out of income that has already been taxed, and that there are no UK tax breaks for paying the fees.

As a starting point, a simple forward projection can be done using the number of years of schooling required and the number of children. Once the annual targets are identified, a funding strategy that is as tax-efficient as possible can be developed.

Armed with your projection it may be a good idea to speak to a financial adviser who will be able to advise on a number of financial products, often tailored with school fees in mind.

Outwith structured products, many parents simply choose to save diligently and start as soon as possible. Investing the funds in tax- efficient vehicles such as Isas or some National Savings products can be sensible options.

But first it is worth looking at the various bursaries and scholarships on offer. The charitable status held by public schools requires them to demonstrate both charitable purposes (normally education) and public benefit. There are also several charitable trusts in place which provide educational assistance to individuals with particular backgrounds or talents.

Once those possibilities have been exhausted, it is worth approaching the school to ask for a discount for fees paid upfront. This can cut the ultimate cost substantially, while giving peace of mind that future bills will be met. The drawback is that you are tied into one particular establishment.

While you are at it, don't forget to inquire about sibling discounts.

Securing sufficient funding for school fees is not a simple task and any planning will need to be reviewed on a regular basis to account for fee changes, new arrivals, changes in disposable income and extra charges such as music lessons, schools trips and stationery.

A review may also be needed if other circumstances change: for example if the children's parents separate. If this happens, the couple need to take account of who has the contractual obligation to pay fees, and what the notice provisions are (usually a term's notice is required) if the children are going to be coming out of the school. If the children are going to stay at the school, the couple need to decide who is going to pay the fees.

They may also have to consider who has paid the fees to date and, indeed, who is going to pay in future.

If agreement cannot be reached about who is to pay school fees, the court retains the power to order that fees should be paid and to allocate expenditure between the couple. Any such payments are distinct from payments of aliment (support) between spouses or payments for child support, which will be dealt with by the CSA in the absence of agreement between the couple.

School fees can also help families cut their tax bill. Although any payment cannot help your income and capital gains tax position, the payments can have inheritance tax (IHT) advantages.

Traditionally many generous grandparents have gone down the historic accumulation and maintenance trust route, setting aside a lump sum for the grandchildren. Even with the recent tax changes, this has remained a popular option, although there are now rules for the funds to be advanced by the age of 18 or the trust suffers tax penalties if the value is above the current threshold of £312,000.

The advantages of the trust route are that the needs of each of the beneficiaries can be addressed and monitored, and the gift benefits the donor's IHT position in that the value is extracted from their estate, although a lifetime charge may apply if certain levels are exceeded.

As well as family contributions through a trust route, outright gifts can greatly assist in reducing the burden of the fees, and payments of £3,000 per tax year per donor can be made with no knock-on IHT effects.

Additionally, much greater payments can be made tax-efficiently where the donor makes the gifts on a regular basis (for example, each academic year). To ensure that the tax status is as favourable as possible, professional advice should be taken to record the gifts.

At the end of the day, perhaps the only comfort parents can take is that in a few decades' time the tables are likely to be turned, with the children faced with planning for those hefty nursing home fees.

• Fiona McDonald is an associate at Pagan Osborne