Eton College, the exclusive British boarding school where boys have to wear tailcoats to lessons, has issued its first private placement of debt, borrowing £45 million pounds to help needy pupils with fees and build new facilities.
The alma mater of prime minister David Cameron and 18 of his predecessors holds a special place in British national identity. The pinnacle of educational excellence and aspiration to some, it symbolises entrenched class privilege to others.
Set in a leafy campus by a curve in the River Thames near Windsor, west of London, the 575-year-old boys’ school also counts Princes William and Harry, London mayor Boris Johnson and archbishop of Canterbury Justin Welby among its alumni.
Eton, which has no other debt, issued the private placement to British institutional investor Friends Life, bursar Janet Walker said. The interest rate was fixed at 3.63 per cent for 45 years, the school said in a statement.
Steeped in unique traditions like the Wall Game, a variant of football described on the school’s website as “exceptionally exhausting”, Eton selects boys by ability and charges annual fees of over £35,000 to those who pay the full amount.
The fees, the traditions, the roll call of illustrious alumni and a school jargon impenetrable to outsiders in which teachers are “beaks” and the academic timetable is known as the “abracadabra”, have all contributed to the perception of Eton as a bastion of the elite.
However, the school has sought, in recent years, to become more accessible to boys of less privileged backgrounds and Walker said one reason for the private placement was to raise money for further bursaries and scholarships.
“We would like to be needs-blind,” Walker said, adding that at present the school was able to help a lot of parents whose sons gained admission and who could not pay the full fees, but not all of them.
“Hence part of the rationale of borrowing money and re-investing it and hoping to make a return on it is we want to pay more in fee remission and we don’t want to take that money from current parents,” she said.
Walker said half the funds would be placed with investment firm Partners Capital, which already manages part of Eton’s endowment fund and has delivered annual returns above 3.63 per cent in the past, while the other half would be set aside.
“Of course like any financial plan it may all go horribly awry, but I suppose it looks like a good bet,” Walker said, adding that the school had been keen to take advantage of historically low interest rates.
She said the use of private placements was increasing among British educational institutions and Eton was following the lead of another private school, Christ’s Hospital, as well as several of the colleges that make up Oxford and Cambridge universities.
As things stand, just over 20 per cent of Eton’s 1,300 pupils are helped to pay their fees by the school. On average, those boys have their fees reduced by 63 per cent, and 70 boys pay no fees at all.
Eton spends over £6 million per year on bursaries and scholarships, none of which comes from the fees it receives from those families who pay the full amount, Walker said.
The money raised through the private placement is also intended to part-fund new indoor sports facilities.
“As with all such projects we hope that we will raise some money from donors. We’re fortunate in having the sort of alumni who will often help out, but it’s doubtful we will fund the whole cost,” Walker said.