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How to Get Private School Financial Aid | K-12 Schools

Let’s face it, private school is expensive, and tuition fees can be a major drawback for many families. But financial help is available, if parents are willing to do some research.

Nationwide, a private school costs an average of $12,350 annually for a K-12 and more than $16,000 for a high school, according to the Education Data Initiative. But costs can be significantly higher in many parts of the country. At the elite Dalton School in New York City, for example, the tuition for the 2021-22 school year was $55,210.

For families who can’t pay large education bills out of pocket, private school funding often means pooling different types of assistance such as loans, vouchers, special scholarships and – perhaps most importantly – financial assistance from the school itself.

“Financial assistance from a school is very far from the way most families fund special education if they can’t afford it,” says Mira McGovern, vice president of media for the National Association of Independent Schools, better known as NAIS.

I go to school first

An estimated 28% of private school students across the country receive some form of financial assistance, according to the Education Data Initiative, and that number is even higher in some schools. At Phillips Academy in Andover, Massachusetts, for example, 46% of students receive financial aid and 12% receive full scholarships, according to the school’s website.

At NAIS, which represents more than 1,600 K-12 charter schools in the United States, nearly 27% of all students receive need-based financial assistance, McGovern says. The average scholarship per student was more than $19,000 in the 2020-21 academic year.

Most NAIS schools offer financial aid, and families fill out financial forms similar to what is required for college financial aid programs, says McGovern. Some schools offer a certain number of full scholarships and others may offer partial scholarships.

Mark Kantrowitz, a financial aid expert and former publisher of Savingforcollege.com, agreed that the most accessible financial aid for K-12 special students is provided by schools. But he also points out that other forms of help are available.

Understand 529 . plans

For parents of young children, saving to pay tuition is often an option, and there are many government programs designed to help.

The 529 Plan is a tax-advantaged savings plan designed to help pay tuition fees. Although it is a federal program, plans are administered by each of the 50 states and the District of Columbia. It was originally limited to post-high school education costs, but was expanded to include K-12 education in 2017.

Contributions are not tax-deductible for federal income tax purposes, but more than 30 states offer tax deductions or credits of varying amounts for contributions. The federal government doesn’t tax earnings on these accounts, and you won’t pay taxes when you withdraw money for qualified education expenses. Other things to know about the program include:

  • Maximum contribution limits vary by state, but many parents set a maximum contribution limit of $15,000 annually to avoid federal gift tax reporting requirements.
  • There are no restrictions on the income level of subscribers.
  • Withdrawals for K-12 education are limited to $10,000 annually and can only be used to pay tuition fees.

When it comes to private school affordability, a 529 plan can be a great place to start, especially if parents start early, says Melanie Hanson, senior editor at EducationData.org.
“Most people think of 529 in terms of college tuition, but the money can be used to cover many types of education expenses, including private schools,” she says. “It is not unreasonable to start a plan for your child at birth, especially if you intend to start him in a private school at an early age.”

Understanding Coverdell ESAs

Coverdell Education Savings Accounts, or ESAs, are tax-deferred trust accounts created by the federal government to help families pay for education expenses. The accounts offer tax-free earnings growth and tax-free withdrawals, and can be spent on educational expenses beyond tuition. Other things to know about the program include:

  • The maximum contribution is $2,000 per beneficiary each year.
  • Eligibility is limited to families under adjusted gross income of $220,000 for subscribers and $110,000 for subscribers in 2021, according to the IRS.
  • Funds must be used by students before age 30 or withdrawals will be accompanied by taxes, fees, and penalties. Age restrictions may be waived for people with special needs.

School vouchers and tax credits

School vouchers are state-funded programs that allow families to use public funds to attend private schools. There are currently 27 voucher programs operating in 16 states and the District of Columbia, according to the State Education Commission.

While the programs operate differently in each state, voucher programs primarily use state funds to pay a portion of the cost of the private school. Most programs target low-income families in an effort to provide parents with additional educational options.

For example, Florida offers the Family Empowerment Grant, which provides vouchers to students who qualify for food assistance programs, whose family income meets certain requirements, who are currently living in foster care, or who meet other criteria. The program serves more than 30,000 students each year and the average scholarship was $5,955 in the 2019-20 academic year, according to EdChoice, an advocacy organization.

In addition, some states offer families different types of limited tax credit for private school expenses from kindergarten through 12th grade. Nine states (Alabama, Illinois, Indiana, Iowa, Louisiana, Minnesota, Ohio, South Carolina and Wisconsin) offer tax credits and deductions for education expenses including tuition for private schools, according to EdChoice.

Louisiana, for example, offers discounts to families who pay for private school fees, uniforms, and other expenses. More than 70,000 taxpayers have benefited from the program with an average tax deduction of nearly $5,500, according to EdChoice.

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