Back To School 1 - Page 14 - PAYING FOR PRIVATE SCHOOL

Back To School 1
- Page 14
By Carol Sorgen, Contributing Writer

Independent school tuition is on the rise. According to the 2017-2018 NAIS Trendbook, published by the National Association of Independent Schools, in 2006-2007, day school tuition was 34 percent of the median household income in the United States. In 2015-2016, that percentage had risen to 43 percent.

Private school tuition may be expensive, but there are ways families can plan for the expense.

For parents, Stephen Ross, CDFA, vice president of The Pearce Group, Merrill Lynch, Pierce, Fenner & Smith Inc., in Towson, offers this advice:

Start planning and saving early.

Explore all available funding options. Individual schools often offer financial aid. In 2011-2012, NAIS member schools awarded more than $2 billion in need-based financial aid. Other scholarship programs offer financial aid as well, such as Maryland’s BOOST (Broadening Options & Opportunities) program, enacted in 2016, which provides nearly $6 million in annual scholarships to eligible lower-income students in grades K-12.

Look for outside scholarships and grants.

Investigate state vouchers (available for special needs children, for example).

Ask your financial advisor or accountant about tax credits.

Consider religious schools, which are typically much less expensive. According to the Council forAmerican Private Education, nearly 80 percent of private school students attend religious schools; for their families annual tuition can range from around $6,890 to over $10,000 a year. For non-sectarian schools, tuition averages over $20,000 a year.

“Understand your various payment options,” Ross advises. “If you’re able to pay for an entire year upfront, typically you will receive a discount.” If that isn’t an option, monthly tuition payment plans are available, as are loans of various types.

“Don’t overlook the contributions grandparents can make,” Ross continues. “You can leave a legacy of education to your grandchildren by considering gifting strategies, which also can remove assets from your taxable estate.”

In terms of savings, Ross advises that Uniform Gift to Minors Act (UGMA)/Uniform Transfers to Minors Act (UTMA) accounts offer some limited tax savings and impose no restrictions as long as assets are used for the benefit of the minor. Assets gifted to the child are irrevocable, the beneficiary can’t be changed, and the beneficiary gains control at the age of majority for the state in which the child lives.

“Section 529 plans provide the biggest recent impact or change,” says Ross, noting that effective Jan. 1, 2018, family members can take a federally tax-free distribution from a 529 plan of up to $10,000 per calendar year per beneficiary to pay for elementary or secondary, private, or religious school tuition. Prior to the recent tax reform, federally tax-exempt distributions were only eligible for higher education. Additionally, they are generally treated more favorably for financial aid purposes. •

For additional information, visit:

National Association of Independent Schools

Council for American Private Education,

Children’s Scholarship Fund


FACTS Grant and Aid Assessment

Parents’ Financial Statement