Financing a boarding school education can be very confusing for many parents. Here are some strategies to help you understand your options.
Financing a boarding school education can be very confusing for many parents. You wonder whether you make too much to be eligible. Is there a specific time when you apply? Here are some facts most of us didn't know about private school financial aid.
1. You have to apply for it.
Applying for financial aid at most private schools is a separate process from applying for admission to the school. You also need to make sure that you apply early. This is particularly important if the school has no specific admissions deadline or rolling admissions. Each school has allocated a specific pool of funds for financial aid. Once it is spoken for there generally are no more funds in that academic year.
2. You may be eligible for free tuition if your family income is below a certain amount.
, St. Paul's
, to name just a few schools, all have financial aid programs which offer a tuition free education to admitted students whose income is below a certain threshold. The threshold varies but is in the $60-75k range. Why are these highly competitive schools offering a free education to children from families with incomes below $75,000? Simply because they want to make their excellent educations available to a wider constituency. When tuition and expenses creep into the $50,000 range, it means that only a tiny percentage of American families can afford to attend those schools. Schooling has to be free in order to attract students from families making less than $75,000.
3. There is a common financial aid application form.
Many private schools use a common financial aid form. This vastly simplifies the process of applying to several schools. You will have to fill out the Parents' Financial Statement (PFS)
online. You can also complete a paper version of this application. This will be available from school admissions offices.
4. Most schools have a sliding scale of aid.
You may think that you are ineligible for financial aid because your family income is over $200,000. The truth is that you may indeed be eligible for some aid. It will depend on factors such as how many children you have at the school and so on. Ask the school.
If you are eligible, are you guaranteed to receive financial aid? Unfortunately, no. The determination of who gets financial aid rests entirely with the individual schools. Not with SSS or NAIS. Individual schools decide how much money is available for financial aid and how it is awarded. Also remember that the amount of money which schools have in their financial aid pool is dependent on many factors including the number of students requiring aid, the amount of money which has been raised from gifts and investment income and the financial aid poilicies which the board of trustees has determined, among other factors.
5. Most schools have increased the amount of aid dramatically.
Private schools recognize that they need to offer more aid to more families in these very tough financial times. Changes in employment and shrinking financial resources have meant that many more families who normally might be able to afford private school are asking for help. Schools have reallocated resources to make sure that they can meet the increased demand.
Remember that each private school sets its own specific financial aid policies. So, what you may be offered at one school will most likely not be what you will be offered at another school.
6. You need tuition insurance.
This is a 'must have'. After all you have just paid $52,000 for a year's tuition and fees at St. Sedgewick's. You are all set, right? Not exactly. What happens if your child suddenly takes sick before the end of the school year? What if circumstances beyond your control force you to withdraw her from school in March? What if he is expelled? In brief, you are obligated for the entire year's tuition and fees regardless of whether your child completes the year or not.
That is why you need tuition insurance. The insurance plan will pay for the unused/remaining portion of your child's time at the school. You have contracted to pay for an entire year when you signed the contract with the school at the time she was accepted. You do not want to be out of pocket. Neither does the school. This is why tuition refund insurance is an important part of your planning for a private school education. Tuition refund policies are in place at every private school regardless of whether it is day or boarding, large or small, elementary/nursery school or high school.
Each insurance plan has its own specific conditions and limitations. Read the fine print carefully. Understand what you are purchasing.
Financial aid can be a complicated proposition. You may even find it intrusive and embarrassing. The truth is that there is much more at stake, namely, your child's future. So, get your affairs in order. Gather all the required paperwork and forms. Submit everything as early as you possibly can.
7. What about international students?
Financial aid for international students is generally not available. The assumption is that either you or your company will pay for your child’s education as part of your compensation package. That’s fairly standard practice. It’s also a reason why you will find international and British-American schools in major American cities. These schools have sprung up to take care of the needs of expats who are in the U.S. for the short term and who do not want their children to miss any part of their British style education.
Tuition fees are generally due and payable in two installments: one due in August, the second in December. The typical school year runs from mid September through early June. Monthly payment plans are available as well. Most of these plans simply divide the gross tuition and charges by 10 and you pay that amount monthly.
8. What about borrowing to pay for boarding school?
In the past fifteen years, the emergence of private K-12 education loans has made all types of private school education more accessible. Private student loans are an excellent option that will help you avoid dipping into savings or using high-interest products like credit cards. These loan products, many of which are credit-based, can help you spread out tuition payments and make financing tuition more manageable.
Should you decide to finance your child's education with a private K-12 education loan, there are a number of things to consider before making your final decision.
Interest rates and fees vary based on the type of loan you receive. Some lenders have products that offer different interest rates based on the borrower's credit history and score. Other lenders offer a flat rate for every approved borrower. Many loan programs may also include an origination fee. This fee may be an out-of-pocket fee or it may be included in the principal of the loan.
Repayment terms and deferment options (when available) also differ between private loan programs. Some loans begin repayment immediately following the school's cashing of the loan check. Others might provide a deferment period during which no payments are required. Some private loan programs allow a borrower to pre-pay the loan without penalty, while others charge a fee if you decide to pay off your loan before the end of the repayment period.
The most important metric when comparing and choosing the right private loan is the APR. The APR, or Annual Percentage Rate, represents the annual cost of your loan and is affected by the loan's interest rate, origination fee (if any), and repayment and deferment terms. Be sure to review all aspects of the assumptions and loan terms used in an APR calculation to ensure a true "apples to apples" comparison among loan options. Always consultant your financial advisor when considering taking out a loan.
9. Consider free schools and scholarships.
There are only a handful of free boarding schools
in the United States. Most of them were founded many years ago by visionary, community-minded individuals who believed that children from working class and poor families should have the same educational advantages as children from families with money. The impact these schools have had on society is enormous. The benefits to thousands of students and their families are priceless.
In addition there are a handful of scholarships available for private school students. It makes good sense to explore these options as well.