There is no question about it ? private school education is not cheap. Among almost all families with children enrolled in pre-collegiate private school, paying the tuition bill takes careful planning and thoughtful navigation through the available financial options. For parents who entertain private school education for their children and seek financial assistance to cover the expense, learning about the range of options early is essential and implementing the right set of options requires considerable amounts of homework and legwork.
In almost all instances, the primary source of funding for tuition expenses, and in the case of boarding school, room and board, comes from the student?s family. However, opportunities to obtain assistance through financial aid and grant programs for families that demonstrate need and merit scholarships for students who demonstrate talent and promise are available. In addition, payment arrangements and education loans are additional options that can ease the stress that private school tuition can put on the family budget.
Financial Aid
Almost all financial assistance for private school tuition comes in the form of aid that is awarded by the schools themselves. Each year, private schools allocate a portion of their budget to financial aid as a means of giving a broader range of students the opportunity to attend their school.
Financial aid awards offset the standard tuition expense and do not need to be repaid to the school. However, families need to understand that funding is limited and every family that applies may not receive an award or an award in the amount that they hoped to receive. Additionally, there is no guarantee that the award will be continued in subsequent years and in most cases families need to reapply for financial assistance each year.
Financial aid programs vary from school to school with respect to the amount of assistance that is available and the share of students that receive awards. The best place to learn about financial aid opportunities is from the admissions office at the schools that are of interest to a family. Families should investigate the programs very early in the private school admission process so that they are prepared to balance financial aid application efforts with the school admission activities and application requirements.
In almost all cases, to be considered for financial aid, families need to complete a financial aid application. The application process frequently involves a third party organization that is hired by the schools to obtain pertinent family financial information and process the application to help the school to determine the level of financial need. Whether a third party is involved or not, families are expected to provide information about their family financial situation, including family size, number of school-age children, family income, expenses, existing debt, and family assets. Assets include home equity, business equity if a business is owned, equity in vacation or investment property, and checking, savings and investment accounts.
More often than not, families will be required to submit their federal income tax forms to substantiate family income information provided during the application process. (See The Financial Disclosure Process).
The product of the financial aid application process is an estimate of the portion of family income that can realistically be spent on private school tuition. This information is the basis on which school administrators make their financial aid award decisions.
Families that apply for aid at more than one school will learn that the amount of aid that is awarded to any one family will vary relative to the amount of aid that the school is able to allocate to tuition assistance, the annual tuition cost, the number of families applying for aid, and the school?s philosophy and policies for awarding aid. Therefore, families may want to ask the following questions to get a general idea about a particular school?s financial aid practices: How much aid will be awarded in total? How many students will receive aid? What is the range of the amounts of aid awarded to students? What is the average amount of aid that is awarded to an individual student?
Schools administrators assert that the decision to offer admission to a student is independent of a family?s request for financial assistance. Generally referred to as ?need-blind? admissions decisions, students who meet the admissions criteria are offered admission to the school regardless of the ability of the family to meet the financial obligations. If the student is admitted, the school will attempt to meet the demonstrated financial need of the family.
The Financial Disclosure Process
The income portion of the financial information that a school wants when considering financial aid is generally for the tax year that precedes the year in which you are applying for aid. For example, if you are applying for aid for the 2007-2008 school year, you would be expected to provide the information associated with your 2006 federal income tax return.
In the case of your assets, you will be expected to provide the value of the assets on the date that you complete the application for aid. For the purpose of determining financial aid grants, assets include the equity in your home, bank accounts, certificates of deposits, mutual funds, stocks, bonds, (beneficial) interest in a trust, real estate investments, the value of a business or the parents share of a business partnership.
Generally, parents are not required to submit the value of retirement assets such as IRAs, 401(k)s, and 403(b)s. Some schools, however, do request information about these assets to determine if a family has a significant amount of money set aside for retirement and very little in available assets. In these cases, the school may determine that a family in this position could have saved more money to pay for their child?s education rather than reserving it for retirement. In these situations, a school may reduce the amount of the financial aid grant.
Each school has the latitude to increase or decrease the amount of aid that they award to any family based on factors and perceptions that they believe are relevant to the economic position of the family. These considerations may include the number of other children that are enrolled in private school or college, loss of a job, or high medical bills. Families in these situations or families affected by other unusual circumstances should advise the school financial aid personnel accordingly.
The output of the financial disclosure process is the calculation of the expected family contribution to the tuition bill. In the case of boarding school, the costs of room and board are also considered. The expected family contribution is subtracted from the total cost of the school to determine the amount of the financial aid grant.
Disclaimer: The presented information is believed to be reliable and accurate. Changes in programs and policies may be implemented without notice. Please note that the information should not be construed as legal advice nor should it be used as a substitute for consulting legal counsel or other advisors.
Back to article.Merit Scholarships
Although need-based tuition assistance is by far the largest share of financial support given to private school families, some schools offer scholarships that are not related to family income and financial resources, or the ability to pay the standard annual tuition. Merit awards are usually given in recognition of a student?s talent or achievement in a particular area such as academic performance, participation in the arts, community involvement, or the anticipation that a student will excel in a particular area that will benefit the members of the school community. As is the case with need-based assistance, the school admissions office is the best source of information about merit scholarship programs.
Some schools award scholarships to students based on their performance on admissions tests or some other indicator of academic talent. Other types of merit scholarships generally require students to complete a special application to be considered for an award.
Some schools establish merit scholarship programs to attract well qualified and talented students who might not attend their schools without some financial incentive.
A limited number of scholarships for private school education may be available from outside sources such as community organizations, religious or civic groups, and philanthropic organizations. Another resource for scholarships may include employers of parents and grandparents.
Usually merit scholarships are renewable in subsequent years providing that minimum criteria are met such as a minimum grade point average, continued participation in the activity for which the scholarship was awarded, or continued participation in community service.
Like financial assistance, a merit award probably will not cover the full cost of tuition, but each dollar that offsets the standard tuition cost will help.
Tuition Financing Options
Beyond financial aid grants and merit scholarships another way to lessen the sting of large tuition bills are programs that allow families to spread tuition payments over a period of ten months during the respective school year rather than in two large lump sum payments, which is the payment schedule used by many private schools. These programs, which are generally administered by a third party organization, do not charge interest. However, there is usually an administrative fee that a family pays at the time they sign up to use this option.
Although payment programs do not reduce the amount that a family will pay for tuition, the monthly payment option can lessen the sting of the two large payment arrangement.
Tuition Loans
There are loan options that parents can consider to finance their children?s private school education including home equity lines of credit and installment loans. In recent years, some banks and finance companies introduced private elementary and secondary school education loans. These loan programs offer parents varying interest rates and repayment terms, which are usually based on the parents? credit history.
Families should be judicious in taking on debt to fund private school education, realizing that educational expenses, which include college and possibly graduate and professional school, will span several years. Accordingly, consideration should be given to limiting education loans to accommodate temporary family financial situations and short term financial needs when family circumstances arise such as:
- Income fluctuations such as those that are sometimes experienced by small business owners and self-employed professionals
- Bridging the income gap until a bonus, promotion, raise, or tax refund arrives
- The need to free up the family budget to pay for unplanned expenses
- Temporary cash limitations associated with the purchase of a new home or a recent divorce situation
Financial organizations that offer pre-collegiate education loans include Act Education Loans, Citibank, Chase, Key Bank, The Education Resources Institute, Inc. (TERI), The prepGATE Loan Program, Sallie Mae, and Your Tuition Solution. (See Private School Education Loan Providers.)
After exhausting other financial assistance options, parents who believe that tuition loans will provide the level of assistance they seek to finance private school education should shop around to find the lowest interest rates and the most favorable repayment terms for their family situation.
Leave No Stone Unturned
Families should inquire about other tuition assistance options that may be unique to a particular school. These may include work-study programs in which a student can earn money or tuition credit by participating in on-campus jobs, such as working in an office or the library or assisting with one of the school?s athletic teams.
Some schools may offer sibling discounts, which reduce the amount of tuition if multiple children from the same family attend the school.
As previously suggested, finding the right set of options for tuition assistance requires a lot of homework and legwork and the amount of assistance available through financial aid or scholarships is limited. Parents should, therefore, start their exploration of options as early as eighteen months prior to the time that they expect to enroll their child in private school.
Private School Education Loan ProvidersAct Education Loans
Loans are provided for elementary, secondary, and preparatory school education expenses including tuition, tutors, uniforms, computers, previous school bills and special preparation classes for standardized testing.
Eligible families may borrow up to $30,000 annually with a $130,000 aggregate maximum borrowing limit.
(866)229-8900
www.acteducationloans.comCitibank ? The Student Loan Corporation
CitiAssist? K-12 LoanParents or legal guardians of children attending private primary or secondary schools may borrow up to $15,000 per year with an aggregate loan limit of $75,000.
(800) 967-2400
www.studentloan.comChase
Chase Education? K-12 LoanLoans are available to parents or other adult sponsors (relatives or friends) of children who attend participating non-public elementary and secondary schools, including independent, religious, military, or special needs schools.
Loans of $1500 - $30,000 per year are available for education related expenses including tuition, uniforms, room and board, books, fees, supplies, and even a computer.
(877) 663-3906
www.educationone.com/foryou/k12student.htmKey Bank
AchieverLoan?Loans are available to parents or adult sponsor of students attending K-12 private school.
Loan amounts of up to the amount of the cost of education less financial aid received are available with a minimum loan amount of $2000.
(800) Key-Lend (800) 539-5313
www.keybank.comThe Education Resource Institute (TERI)
This organization provides private school K-12 loans through a network of commercial lending institutions.
Loans of $1000-$20,000 are available on an annual basis.
(800) 255-TERI
www.teri.orgThe prepGATE? Loan Program
prepGATE K-12 ProgramThis program provides loans to parents of students attending approved private K-12 schools including independent, parochial, day and boarding schools, and special needs schools.
(880) 353-GATE
www.prepgate.comSallie Mae
The Sallie Mae K-12 Family Education LoanLoans are available to parents of children attending private K-12 schools for both tuition and other education-related expenses such as books, computers, and fees.
The loan amount can range from $1000 up to the total cost of the student?s education. This program provides loans to fund past tuition balances.
(880) 2-Sallie
www.salliemae.com/k12loanYour Tuition Solution
Fixed rate loans are available to families with students enrolled in accredited K-12 private schools with repayment terms from 12-60 months.
(800) 920-9777br /> www.yourtuitionsolution.com
Disclaimer: The presented information is believed to be reliable and accurate. Changes in programs and policies may be implemented without notice. Please note that the information should not be construed as legal advice nor should it be used as a substitute for consulting legal counsel or other advisors.
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