Financing Basics

There are several ways to finance a private school education, learn more about your options here. We'll explore some of the most expensive schools, explain why tuition is rising and show you how it's all paid for.
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Updated   May 26, 2016 |
How Do They Pay for That?
You have several options. They include tuition payment plans, loans, scholarships and more.
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.
 
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 a 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 find out the details. Better yet, call and ask.
 
Loans
 
If you are strapped for cash, but have assets which can be pledged as collateral,
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Updated   June 13, 2016 |
True or False: Do Declining Endowments Mean Less Financial Aid?
The impact of the 2009 financial meltdown on private school endowments has not been as severe as it was on college endowments.
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 the economic and financial meltdown of 2009. 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
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Updated   May 25, 2016 |
Why Are Tuition Costs Rising?
Private school tuition seems to go nowhere but up. We look at some of the reasons why and offer the opinion that a private school education is still good value.
No doubt about it, private school tuition costs are rising. Some schools seem to be rising at a faster rate than others. Why? What's behind those tuition increases? Unfortunately for many private schools costs of basic goods and services have risen dramatically. Energy costs alone chew up a major part of any school's budget. Faculty and staff salaries and benefits are a substantial part of  budgets as well. In order to attract and retain qualified, skilled and experience personnel, you need to offer a decent compensation package with annual increases. Most schools also offer free or substantially reduced tuition for children of faculty and staff.

The Foundation Center keeps Forms 990 for every non-profit organization which files with the IRS. It is fairly easy to see how much the school reported as income and expenses as well as a wealth of other data. Note that it is frankly impossible to compare apples to apples when it comes to private schools. Even their accounting and reporting varies from school to school. But a review of the data paints the same picture: costs are rising.

Another fact to consider is that tuition charged by a school does not completely offset expenses. That is why you will see your tuition bill filled with additional charges for technology, communications, laundry, athletics, uniforms and so on. These sundries, as the more bespoke schools style them, vary from school to school.
 
Is it worth it? Private schools have to spend their income wisely. They
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Updated   May 25, 2016 |
Borrowing to Pay for Private School
Borrowing money to pay for your child's private school is one of several options you have.
Whether you are a parent looking to send your child to a private K-12 school, or your child is currently enrolled in one, you are probably exploring your options for how to pay for tuition and the other costs associated with a K-12 school. The following information will guide you as you consider the many loan program options available to help you pay for your child's private education.
 
Tuition Planning
 
Advanced planning is your best option for financing a private school education. The first step in planning for education financing is to contact the admissions or business office at your child's current or prospective school. The financial aid officers at the school can help you learn about available financing options. Waiting until the last minute is never a good idea when it comes to matters financial. By starting your research early you give yourself time to plan paying for this major expense on the best terms possible.
 
Today a large number of private school students receive financial aid. Many schools offer financial aid in the form of merit awards and need-based scholarships. Based on eligibility, these awards can help make a private school education more affordable. Financial aid grants may cover a significant portion of your child's tuition depending on the school and eligibility. Knowing what a potential award might be helps you plan your borrowing.
 
About Private School Student Loans
 
In addition to scholarships and grants, there is another valuable resource to help you pay for your child's education, particularly when grants and
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Updated   April 09, 2015 |
Will The School Give Me A Refund If My Child Withdraws Early?
What happens if my child suddenly takes sick before the end of the school year? What if he is expelled? Answers here.
You have just paid $45,000 for a year's tuition and fees at St. Sedgewick's. You are all set, right? Not exactly. What happens if your child suddenly takes sick before the end of the school year? What if circumstances beyond your control force you to withdraw her from school in March? What if he is expelled? In brief, you are obligated for the entire year's tuition and fees regardless of whether your child completes the year or not.
 
What Are My Options?
 
The only remedy you have is to sign up for the school's refund plan. It typically acts like insurance in the event that your child withdraws before end of year.  The insurance plan will pay for the unused/remaining portion of your child's time at the school. You contracted to pay for an entire year when you signed the contract with the school at the time she was accepted. You do not want to be out of pocket. Neither does the school. This is why tuition refund insurance is an important part of your planning for a private school education. Tuition refund policies are in place at every private school regardless of whether it is day or boarding, large or small, elementary/nursery school or high school.
 
St. Mary's policy is the sort of thing you can expect at most schools:
 
"To minimize the loss to a family due to early departure or change in boarding status, Saint Mary’s School has established a Refund Plan. Under ordinary circumstances, the Refund Plan
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