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The New Way to Pay for Private Education

Written By Gary S. Williams, CFP®, CRPC®, AIF® and Nicholas A. Ibello, CFP®, AIF® February 27, 2019

Every parent wants the best for their children; nice friends, excelling in sports or other hobbies, and of course the best education. When it comes to education, the focus is typically around saving for the extraordinary expense of college, but for some parents, education costs may start much earlier. Whether you’ve just had a baby or you are sending your child to high school (or anywhere in between!), your top worry may be saving for the more immediate need: private school. With just over 10% of primary and secondary school enrollment in private institutions, it’s apparent that this type of education is still a popular choice. How, then, do parents prioritize paying for it while also needing to save for college and retirement?

Cost of Private School

While the term “private” can include everything from dual language immersion preschools to high schools owned and operated by religious groups, it still defines a school that isn’t fully supported by government or taxpayer funds. While some private schools do offer a pricing model based on ability to pay, the brunt of the cost of education is still paid for by the student’s family.

To give some perspective, Maryland’s average cost per year for primary private school students is $9,790 for elementary schools (slightly higher than the $9,398 national average.) Secondary school is much higher; tuition for a high schooler averages $16,367 per year (compared to the $14,205 national average.)

Making It Work

Raising a child isn’t a low-cost endeavor, and if you’re set on providing your future student with a private education, it pays to start saving early. Opening a 529 plan (owned by parents) may be one of the simplest ways to take advantage of the time before your child enrolls and some significant tax-saving perks. Thanks to recent changes allowed from the 2018 Tax Cuts and Jobs Act, up to $10,000 can be withdrawn per year, per child, for private school tuition.  You don’t even have to wait until your child is born to begin! If you go this route, once your child is born, you can easily change the beneficiary of the account to their name; you’ll just need your child’s Social Security number to make that switch. has a simple “529 Private School Calculator” that is designed to help families create an effective funding strategy to help cover the maximum allowable private K-12 tuition costs using a 529 plan.

Lastly, for parents in Maryland meeting the eligibility requirements, the Maryland Save4College contribution plan can help lower to middle income families pay for private school. Through this program, up to $500 may be available from the state. Learn more about this program here.

Let the CERTIFIED FINANCIAL PLANNER™ professionals at Williams Asset Management help with your wealth management needs. Whether you need comprehensive and holistic financial planning or investment management, we can help!  We are fee-based, independent financial advisors located in Columbia, the heart of Howard County, Maryland.  Schedule your complimentary consultation today by calling (410) 740-0220!

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