Funding Private School

There are more than 28,000 private schools in the United States, serving more than five million students. While public school is paid by tax dollars, private school attendance can be a costly endeavor for families. As college costs loom in the future, parents need to carefully weigh an investment in private school education to determine if it is the right fit for their families.

The cost for private school tuition varies widely. While some students qualify for free or reduced tuition based on need, the majority pay full tuition for attending a school independent of the state. Research shows schools with religious affiliations can cost less, with annual tuition averaging $2,500.* Private schools without religious affiliations can be as expensive as a private college or university with annual tuitions averaging $15,000. With that kind of annual tab, it’s important to do research and talk with your financial advisor to determine your options.

There are benefits to attending private school. For some parents, religious instruction is a priority that public schools cannot address. Parents may also want their kids to benefit from smaller class sizes or more access to extracurricular activities.

Some may view a private education as college preparation. The reality is, a private school education is no guarantee of admission into an Ivy League school. Admission to most colleges and universities is based primarily on grades and test scores. The ability to pay tuition is becoming more desirable as the limits of scholarship programs and endowments are tested by the growing number of need-based applicants.

Parents with sparse savings accounts or who suddenly find themselves unemployed may need to rethink funding private education for their children. If paying for private school will prohibit your ability to pay for college, then you might want to save your money and have it available later in life. Evaluate the cost of private school to ensure that you are able to realize your financial goals, such as retirement, medical treatments, mortgage payments or other priorities.

Stick to your financial goals

To evaluate the financial impact of a private school education, add up the annual cost of attendance and multiply by the number of years until graduation. Compare this to the cost of attending public school (school lunches, before-and-after care, etc.) It may seem affordable to spend $2,500 on annual private school tuition at the elementary school level, but keep in mind, tuition typically rises at the junior high and high school levels. Also, while you may get a discount for enrolling more than one child at a private school, your annual expenses will go up considerably if you’re paying for siblings. Your true appraisal should consider what your life would be like if you could tuck that money into an interest-bearing account and have it available for the future.

Talk to a financial advisor to get an objective perspective on funding your child's education. The important thing is to make sure that you are looking at the big picture and taking into account all of your financial obligations along with your dreams. Carefully weigh the benefits and costs of both private and public education.

*Characteristics of Private Schools in the United States: Results From the 2003-2004 Private School Universe Survey, National Center for Education Statistics, U.S. Department of Education Institute of Education Sciences, March 16, 2006.

AJ Jugan and Brian Stumpf are financial advisors and Certified Financial Planner™ professionals. Andrew (AJ) can be reached by calling 412-635-5813 or emailing andrew.m.jugan@ampf.com. Brian can be reached by calling (724) 799-2782 or emailing brian.d.stumpf@ampf.com.