8 ways to pay for private school for your child

Many families desire a private school education, but worry about paying for private school. With the national average tuition of private schools at $13,000 per year for each child, the cost may seem out of reach.

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If you're wondering how to pay for private school, there are many ways to cover the cost, including scholarship programs, grants, and other private school tuition assistance. For families that don't qualify, it may be possible to tap your home's equity, take out personal loans, or get on a payment plan to pay for tuition costs.

How to pay for private school tuition

While the average tuition for private schools is over $13,000 in the U.S., the average cost of private school per state ranges from $4,277 to $29,683. Here are eight ways that families can pay for private school expenses.

Scholarship opportunities

The listed price tags of attending private school are often not the ultimate cost that a family will pay. Scholarships offer tax-free assistance that covers tuition, fees, and other schooling expenses. Scholarships are typically offered by the school, alumni groups, private companies, industry and professional organizations, and community groups.

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There are numerous scholarships available for every type of student. While academic scholarships target students with excellent grades, other scholarships may also be available. Merit-based and athletic scholarships target students with unique skills, while need-based scholarships provide financial assistance for low-income households.

Financial aid

Financial aid programs examine a family’s finances to determine how much their expected contribution is when attending a private school. This process is similar to what college students undergo when paying for college tuition and expenses. It helps support low-income families in covering the costs.

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Financial aid applications detail income, expenses, assets, and liabilities. Schools may use several methods to determine eligibility, including the Free Application for Federal Student Aid (FAFSA), FACTS Grant & Aid Assessment, and CSS Profile. These applications compile financial information in a standardized format to allow schools, scholarships, and grants to evaluate a family’s finances to determine their qualification for financial aid.

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This information is used to determine how much they can realistically pay. The school may have an endowment or benefactors that help to cover the gap between the family’s expected contribution, financial aid received, and the total cost of attendance.

Grants and assistance programs

Local organizations, community programs, and government grants may be available to pay for private school costs. Unlike loans, these programs provide money that doesn't have to be repaid. Some grants and programs offer one-time assistance, while others are renewable as long as you continue to meet the program's guidelines.

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Finding grants and assistance programs that you qualify for can be challenging. Start by searching for "(your state) private school grants" to find assistance offered by your state government. GrantWatch is a subscription-based site that monitors hundreds of grants for public and private schools.

Education savings accounts (ESAs)

ESAs allow families in eligible school districts to withdraw their children from public school and use the "per-pupil school government funding" to pay for private school, tutoring, online courses, and other education costs. The money is deposited into a government-authorized savings plan, where participating families can withdraw to cover qualified education expenses.

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In some cases, unused money can be saved to pay for future education costs, including the cost of higher education, getting certifications, or other career training.

Tax benefits

Since education is such an essential indicator of future success, many families wonder if private school tuition is tax deductible. Unfortunately, most families do not qualify for federal tax breaks for private school tuition and other expenses.

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A 529 Account is a special investment program that allows families to save money for education expenses in a tax-deferred account. The money grows tax-deferred from income taxes, and withdrawals are tax-free when used for eligible expenses. Some states offer tax credits or deductions when residents or taxpayers contribute. These accounts were originally designed for college expenses, but the program was amended in 2017 to include public, religious, and  K-12 private schools.

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Families can set up a 529 Account for each child, and parents (or any other relative or friend) can give up to the annual gift tax exclusion each year. In 2024, the maximum total contribution is $18,000 per child. Under a special provision in the tax law, donors can make five year’s worth of contributions upfront for a maximum of $90,000 in 2024.

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Families with disabled children may qualify for individual tax credits and deductions with a doctor’s referral stating that the child requires a special needs private school. Discuss your situation with your doctor and tax professional if you believe your child may qualify.

Payment plans

Due to the high cost of attending private school, it can be challenging for families to pay the entire cost upfront. With that in mind, many schools offer to spread the cost of attending over several months. In these situations, families are typically required to make an initial down payment and then spread the remaining cost over time. Payment plans typically range from two to ten installments.

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A payment plan can help families afford private school and avoid going into debt. By breaking the total cost into monthly payments, they can more easily fit the costs into their budget. Keep in mind that some schools charge a fee for spreading out payments over longer periods.

Personal loans and financing options

Some families turn to personal loans to cover the cost of tuition. Unsecured personal loans tend to have higher interest rates because they are not backed by any assets. Loan amounts and interest rates are based on your credit score, income, and other factors. However, there is no guarantee that you will be approved for the total tuition amount you need. Additionally, you may need to re-apply for a new loan each year to cover annual expenses.

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Families with investments, certificates of deposit (CDs), or other assets can take out a secured loan backed by their value. These loans may offer lower interest rates based on the value of the asset and loan amount. Asset-backed loans are generally limited to a maximum loan-to-value amount. Additionally, fluctuations in the asset's value may require the borrower to deposit more money or sell portions of the asset to bring the loan back into compliance.

Home Equity

With home prices near record highs, many homeowners have a large amount of equity in their homes. Tapping home equity can be an inexpensive way to finance private school education. Home equity loans and HELOCs typically offer low monthly payments that spread the cost over many years, while a home equity investment requires no monthly payments.

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A home equity loan provides an immediate lump sum of cash and a fixed interest rate and monthly payment. However, you’ll need to choose between taking out more money than you need right away or re-applying for a new loan when you want more money.

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HELOCs provide payment flexibility with interest-only payments based on how much you’ve withdrawn. You can borrow up to your credit limit and repay the balance as your finances allow. The downside is that interest rates are variable, which can lead to higher payments as interest rates rise.

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A home equity investment is a smart choice for families who don’t want another monthly expense. These financing programs don’t require perfect credit, and you don’t have to provide proof of income. You can pay off your balance anytime or wait until you sell the property.

Frequently asked questions

Is private school tuition tax deductible?

Private school tuition is not tax deductible on federal or state income tax returns for most families. Money contributed to a 529 Account may receive a tax deduction or credit in certain states, which may be used to pay private school tuition. However, if your child has special needs and a doctor referral proves that your child requires access to special needs private education, you may qualify.

How can I find scholarships specific to my child's interests or talents?

The best place to start looking for scholarships is the school your child plans on attending. Their counseling and financial aid department can offer numerous resources to help cover the cost of attending private school. The U.S. Department of Labor also offers a free scholarship research tool that your student may find useful.

What are the typical payment schedules for private school tuition?

Families often cannot pay for private school tuition in a lump sum, so schools offer payment plans to spread out payments. Typical payment plans require an initial payment upfront and additional monthly payments over time. These payments may be spread out over two to five months, while others are divided into ten equal payments that cover the entire school year.

Final thoughts

Attending private school can provide an enriched education experience for your children. But many families wonder how to pay for private school. Financial aid through scholarships, grants, and other financial assistance helps cover education expenses without requiring repayment. Personal loans and borrowing against your home can cover the cost, but they add another bill to your monthly expenses. A home equity investment allows you to tap your home's equity without monthly payments, proof of income, or perfect credit.

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