The cost of private schools has increased greatly over the past several years, but you will likely be spending thousands of dollars a year if you want to send your kids to a good private school. Still, that hasn’t stopped parents from thinking about ways they can send their kids to a good private school. Luckily, there are several ways to cover the cost.
Get Your Finances in Order
You might be able to free up more money than you think by getting your finances in order and being disciplined about your savings. Tightening your budget and putting money into savings before you spend it can help you accumulate enough to pay the tuition. If you have student loan debt, look to consolidation and refinancing. If you’re considering one of these options, it’s important to know the difference between student loan consolidation and refinancing, as these are two different processes that can each benefit your financial situation.
Use a 529 Plan
You can take distributions from your 529 college savings plans to pay for a portion of private school tuition, as long as it is no more than a certain dollar amount each year. These plans are typically used for college expenses instead of private school tuition, but there are situations where using this plan could be beneficial. Perhaps your child is already on track to have the funding they need for college.
You may be able to transfer a 529 plan that was intended for another child. Just make sure you check with your state and the state you have the 529 plan in, as state laws can vary across the board. If you take an unqualified distribution from your plan, you may be on the hook for paying back any tax benefits you received as part of the plan.
Roth IRA
If you want to make the most of your golden years, you need to have retirement savings. However, sometimes you can choose to use those savings earlier and elsewhere. You can often take distributions from your IRA account if you are not taking the investment returns.
If you have been contributing to the plan regularly, you will likely have a nice little nest egg set aside by the time your child is ready for private school. If this is your only source of retirement savings right now, you should not use the funds to pay for your child’s education, but if you already have a 401(k) or other savings, this can be a good option. Because you can’t take contributions from your investment income, they will continue to grow in the account.
Look to Financial Assistance from the School
Depending on the school, you may be able to get financial aid based on factors like the number of kids you currently have, your income, assets, or debts. Often, this financial assistance is not income-based, so don’t automatically assume you will not qualify for aid. Of course, every school is different, and some may not be able to offer as much assistance as others. Some are given out on a first-come, first-served basis, so make sure to apply early. Look into scholarships as well.
