By Financial Advisor Peter Egolf
The Main Line and Greater Philadelphia have access to some of the top public and private schools in the state of Pennsylvania. Many young parents and parents with older children are faced with the decision of whether to send their child to a private school or to their local public school system. A major factor in this decision is the cost.
Below is a list of a few of the top private schools in the area with links to their tuition pages:
On the other hand, there are many top rated public schools:
As someone who attended school in Tredyffrin/Easttown School District and had friends who attended private school, I can see both merits, but the cost difference is non-trivial. Most families have multiple financial goals (e.g., retirement, saving for a beach house, sending their kids to college), and the cost of the child’s K-12 education can be a significant factor in that equation.
The total cost of having one child attend private school from pre-K to 12th grade can be around $30,000 per year—or, in other words, $420,000 total, not even accounting for tuition inflation. The yearly and total cost will vary depending on the choice of school selected, the number of years of schooling, etc.
While the yearly cost is hefty, it is essential to consider the even greater opportunity cost of not having this money at your disposal during and at the end of those 14 years. For example, if a family chose to take that $30,000 per year and invest this money at a 6% rate of return instead of paying for primary and secondary school, they could have over $630,000 in investments by the time their child is heading to college*. These assets could fund the child’s college education or bolster the parent’s retirement savings.
Each family has a unique set of desired financial goals, and we work with our clients to determine how they can achieve the outcomes they want for themselves and their children. It’s important to note that educational savings/investments can be amplified by choosing an appropriate investment vehicle that can reduce taxes on your contributions, earnings, and distributions. For example, recent changes to 529 plans allow for up to $10,000/year to be applied towards the cost of private elementary or secondary school tuition expenses. You can read more about 529 accounts in our article, Should I Use a 529 Plan?.
If you’d like to learn more about how to save and invest wisely for your children’s educational expenses, please send us a message to schedule a time to meet.
*This example is purely hypothetical and does not consider taxes, inflation or investment fees.
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