Financing Basics

DO Understand Why Some Private Schools Cost More Than Others

There are several factors which drive tuition costs. Location and facilities and type of school are three of the most important factors. Some schools cost more than others simply because of where they are located. Real estate prices vary widely throughout the United States as you well know. For example, it costs considerably less to rent space in Butte, Montana than in Los Angeles, California.

Insurance costs vary from locality to locality as well. Schools need comprehensive liability and property insurance. That's not an expense a prudent private school business manager will stint on.

The school facilities vary widely as well. A 12 classroom K-6 school located in the 10 year old education wing of a church or temple will cost less to run than a similar school housed in a 1930s mansion set on 30 private acres in the countryside.

Boarding schools generally cost more to operate than day schools. That's because they offer 24/7 supervision of your child as opposed to the 8 or 9 hours daily supervision a day school will offer.

Schools specializing in remediating learning differences and disabilities cost even more because they employ experienced, highly skilled and trained para-professionals and professionals who work with students closely, often on an individual or 1 to 1 basis. That drives the labor cost associated with this kind of teaching much higher than when a teacher has a class of 12-15 students.

DONT Delay Finding

You and I can understand the average cost of tuition of private schools as detailed in Private School Review by being aware of a couple of factors. We will take a look at those factors and also show you how the cost of a private K-12 education varies from region to region. That way, if you have to move from one location to another, you will have a general idea of what to expect as far as your private school expenses go.

We will begin with a look at how the cost of elementary schools compares with schools offering high school grades.

Costs subsidized by religious organizations

Let's examine one reason why average tuition costs can be less in one area than in another. That has to do with the number of religious schools included in the statistics. I am not being negative here. Just factual. Faith-based schools, be they Roman Catholic, Jewish or Christian, or any other religion, tend to be subsidized by their religious organizations. For example, a temple that establishes an elementary school will do so to serve its congregation in the first instance and then as an outreach to the wider Jewish community in the second instance. The tuition generally will be discounted for families who are members of the temple. This practice is similar to how state universities charge less for students who are state residents as opposed to students who are from out of state.

This video offers an overview of

Comparing private school tuitions from one school to another is in so many ways the classic apples to oranges comparison. Why? Because each private school is unique. Each school has its own expenses and sources of revenue. But the variables implicit in the calculation of tuition cost are what drive the numbers. Income and expenses are unique in the same way each private school is unique. With that apples to oranges analogy in mind let's look behind the numbers we see on Average Private School Tuition Cost here on Private School Review.

Understanding tuition

In its simplest form tuition is the amount of money that a school charges for educating your child. Tuition is revenue or income on the school's balance sheet. This is the dollar figure which a school has to charge per student in order to offset all the many and varied expenses of running the school.

To arrive at the amount to charge per student the school has to add up all of its expenses. From that total, it subtracts any income from investments, endowments, and gifts. That net expense is what our tuition charges must offset. To remain viable a school simply must balance its budget. It cannot spend more than it takes in. If it does, it will soon go out of business.

The number of students for which a school has places is the next part of the calculation. For example, if you only have places for 350 students and your

One of my young employees was horrified to discover that a certain Los Angeles day school charges $30,000 tuition. "How do they pay for that?" was his shocked cry. It's difficult for a 24-year-old who's only making $40,000 to understand how families can afford college much less private school. So, exactly how does a family afford a private school education? Here are some ways they can make that special educational opportunity possible.

Scholarships

There are not many scholarships for K-12 private school students. Still, it is worth doing your research in this area to uncover the scholarships which do exist. Several states have programs set up which allow citizens to contribute to funding for private schools. Arizona and Washington offer special tax credits for gifts to private schools for scholarships.

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Financial Aid

This is the most exciting part of the 'paying for private school' picture. Understand that each private school is independent. Each school stands on its own two feet financially speaking. That's why financial aid will vary from school to school. Older, established schools such as Andover and Exeter have substantial endowment funds. That's why they and a few other schools can offer virtually free education to students who come from families which make below a certain amount. $75,000, for example. But you will have to visit the schools' web sites to

The article in the New York Times sounds ominous. Certainly, as it points out, private school endowment funds have seen declines in their value as a result of economic and financial meltdowns. But there are other factors which the article does not address which make the impact on financial aid less of an issue than the writer would have you believe.

Let's look at the facts.

Conservative Investment Policies

The investment approach for private school endowments has historically been a conservative, cautious approach. Trustees and their advisors have generally been good stewards of their finances. They avoided risky investments such as derivatives and real estate despite calls from some quarters to maximize returns. The reason for the decline in their portfolio value is simple: just about every investment-grade instrument declined.

Sustainability

Back in the 90s, sustainability became an important principle in private school mission statements and philosophies. The National Association of Independent Schools has taken a leadership role in supporting all kinds of sustainability initiatives including financial sustainability with its 1,500 member schools.

From the Nais: "In order for independent schools to thrive in the 21st century, NAIS believes that they must be sustainable along five dimensions: financial, demographic, programmatic, environmental, and global."

As a result, schools with significant endowments (greater than $10 million) generally were well-positioned to weather the economic storm which 2009 brought on with a vengeance.

Financial Aid is a Priority

Financial aid goes to the heart of most private schools' commitments to diversity. It is not an option. It is