Good Financial Management Helps Ensure Your Child’s Private Education

Good Financial Management Helps Ensure Your Child’s Private Education
(Monkey Business Images/Shutterstock)
Mike Valles
Giving your children the benefit of private education is an excellent gift. Smaller private or private religious schools have smaller classrooms, letting teachers give each child more time. A private school education, however, costs more, possibly making it difficult to find the money needed. Good financial management can help make it less challenging to keep them in a private school.

Understand the Cost

At the beginning of the school year or before enrolling your child, sit down with school staff to ensure you understand the total cost. This figure will vary from one school to another, as well as by location, and a secondary school will cost more than an elementary school.
On average, MoneyGeek says, a private K–12 school will cost about $12,350 per year. In addition, you will need to think about fees, electronics, books, transportation, lunches, school and sports uniforms, lab equipment, etc.

Ask About Financial Aid

Some schools may help lower and middle-income families with tuition. Experian mentions that some schools do. Also, having more than one child in a private school will often qualify for a discount. You may need to apply for the aid each year. Oftentimes, a monthly payment plan can be worked out—or working as a helper—in some way—in the school may also help reduce the cost.
Scholarships may also be available for students that have need. Several third-party organizations, religious communities, and even some employers may make scholarships available for students in K–12. Ask the school office if some of these are available.

Determine Your Budget

After knowing the cost, look over your current budget to ensure you bring in enough money to afford it. Oftentimes, both spouses need to work to pay for their children’s private education.

You likely will need to exert careful money management to ensure your children can go through 12 or more years in a private school. These schools may also offer K–4 and K–5 to help children prepare for first grade.

At the same time, you do not want to sacrifice having enough money on hand for an emergency fund and some for a vacation or two during the year. Having some extra money for emergencies is necessary because one spouse may become unable to work if an accident or a health situation occurs.

When looking over your budget, look for things that are extras that you could do without. The list could include eating out often, buying expensive specialty coffees regularly, paying for lunches at work, magazine subscriptions, gym memberships, too many trips to the store, and top cable TV services (a simpler plan may be sufficient), etc.

Pay Off Existing Debt

As soon as you can, you want to pay off your debt. As long as you are paying interest on your debt, it means less money to use for something else.
You may want to use the snowball method to help reduce your debt. It means paying off the smallest debt you have. Then, add that same money to the regular payments on your next-sized debt—or on your debt with the highest interest.
If you have a lot of credit card debt, you may want to put it all on a new credit card that allows balance transfers. Many new credit cards will give you 12–18 months of zero or low interest—allowing you to reduce your debt faster—as long as you do not charge anything else on your old cards. Once your debt is paid off—or reduced—you will have more money to give your kids the quality education they need.

Consider Education Savings Plans

Two savings plans have benefits for education—the Coverdell and 529 plans. Neither plan offers deductions on your federal taxes, but you can deduct it on state taxes in some states—if you live in that state.
BankRate mentions that all interest earned in the 529 account is tax-free when using the money for education expenses. You do not pay any capital gains taxes, and you can withdraw up to $10,000 for education. The plans enable you to invest in high-return assets—giving you much more interest than a standard bank account.
These savings plans do have a drawback: you must use the money for education. Finance.Yahoo says it means that if a child decides not to go to school—or dies—the money is stuck in the account. You could use it, however, on another child’s education or even use it for yourself—if there are no alternatives.
A Coverdell Education Savings Account is another option to pay for a child’s education. It is more restrictive than a 529 plan and only allows you to contribute up to $2,000 per year. Also, if you make more than $110,000 per year, you cannot use it at all.

Funds Can Be Used for K–12, Too

529 plans are not just for college; you also can use them to pay for elementary and high school education. As of 2019, the funds in a 529 plan can also help pay off student loans. In addition, you can withdraw money from one account to pay for the education of more than one child.

Start Saving Early

If money is rather tight, you also want to give yourself some time to get started on saving money for your child’s education.

Loans Are Available

If necessary, you may need to take out a loan to pay for the education expenses. Some lenders have special loans available for private schools with lower interest rates. You could also take out a personal loan, but it will have higher interest rates.

Public Education Savings Accounts (ESAs)

Another option to get help with tuition is an ESA—which is not the same as the Coverdell ESA. MoneyCrashers states that when a child is taken out of a public school, the money for that child’s education gets placed into a savings account. Sometimes, this money can be withdrawn by the parents for education. They are usually given a prepaid debit card for it.

An ESA differs from a voucher because you can use it for more than just tuition, such as online learning, tutoring, and even for homeschooling in some places.

There are multiple ways to come up with the money you need for your child’s private education. Good financial management can make it possible, as well as taking advantage of available resources to reduce your costs—if they are available.

The Epoch Times Copyright © 2022 The views and opinions expressed are those of the authors. They are meant for general informational purposes only and should not be construed or interpreted as a recommendation or solicitation. The Epoch Times does not provide investment, tax, legal, financial planning, estate planning, or any other personal finance advice. The Epoch Times holds no liability for the accuracy or timeliness of the information provided.
Mike Valles has been a freelance writer for many years and focuses on personal finance articles. He writes articles and blog posts for companies and lenders of all sizes and seeks to provide quality information that is up-to-date and easy to understand.