Can You Afford Private Schools in NYC?

We all want the best for our kids. And New York City offers some pretty amazing private schools. But is private school a good financial decision for your family?

What it Costs

I took these prices for the 2013-2014 school years from the websites of selected private schools in Brooklyn and Manhattan (try not to choke):

	Berkeley Carroll	Packer	St. Ann’s	Friends	Dalton	AVG
K	$34,185	$33,185	$29,000	$32,000	$37,000	$33,074
Grade 1	$34,185	$33,185	$30,625	$32,000	$37,000	$33,399
Grade 2	$34,185	$33,185	$30,625	$32,000	$37,000	$33,399
Grade 3	$34,185	$33,185	$30,625	$32,000	$37,000	$33,399
Grade 4	$34,185	$33,185	$31,725	$34,400	$37,000	$34,099
Grade 5	$34,840	$33,185	$31,725	$34,400	$37,000	$34,230
Grade 6	$34,840	$33,185	$31,725	$34,400	$37,000	$34,230
Grade 7	$34,840	$33,185	$31,725	$34,400	$37,000	$34,230
Grade 8	$34,840	$33,185	$31,725	$34,400	$37,000	$34,230
Grade 9	$35,365	$33,185	$32,400	$34,400	$37,000	$34,470
Grade 10	$35,365	$33,185	$32,400	$34,400	$37,000	$34,470
Grade 11	$35,365	$33,185	$32,400	$34,400	$37,000	$34,470
Grade 12	$35,365	$33,185	$33,100	$34,400	$37,000	$34,610
TOTAL	$451,745	$431,405	$409,800	$437,600	$481,000	$442,310

Look at the total row and think about that a second. Now think about the balance in your 401(k). Which is greater?

If you are a parent considering a top private school, $33K per year might not have sounded that bad at first. After all, you may be paying that for a nanny when your child is very young.

But have you added up the cost through grade 12? The “total” of $442K is sobering for many.

Of course, there are less expensive options. Many private parochial schools cost far less, as will schools outside of NYC. Financial aid may be available in some cases as well.

However, that isn’t the full cost anyway.

What it Really Costs

Parents need to take the less obvious costs into account: the impact of taxes, inflation and multiple kids, additional expenses of private school, and the opportunity cost.

Taxes. The tuition price is after-tax dollars. If you are in the highest income tax bracket and live in this city, your combined marginal income taxes (federal, state and city) are close to 50%.

To pay $34,000, you would likely need to earmark nearly $68,000 of your gross salary for tuition. Do you really want to do that?

Inflation. Do you think prices posted this year will stay the same for the next 12? I don’t. Inflating the average cost by 2.5% per year (pretty conservative, in my opinion), would raise the total (K-12) cost above $500K.

Multiple Children. If you have 2 or 3 kids … you have 2-3 times the expense.

Additional Expenses. Private schools are constantly raising money. Activities and such cost extra too. And it’s pretty safe to predict that when your kid’s friends have expensive toys, yours will want them too.

Opportunity Cost. Let’s assume you can pay the tuition. OK, but will you need to sacrifice in other ways? Many would argue that they will gladly sacrifice or “nothing is too good” for their kids. But is that good for you?

Will this expense prevent you from saving for the future, buying the home you want to live in, or generally enjoying your hard-earned money? If you are not saving for retirement, will your kids or grandkids need to take care of you? If so, can you really afford it?

You don’t want to realize you are in over your head in a few years. It’s much harder to consider taking your 2^nd or 3^rd grader out of private school, than sending them to public school in the first place. It’s not a place I want you to be.

What is the Alternative?

Public school!

If you don’t like your zoned public school, you can request a variance to attend another school or you can consider one of the many charter schools popping up all over. If you want more academic enrichment activities for your child, classes, camps and after-school programs for every interest abound.

You CAN get a great education in public school. I actually have proof – I have clients whose New York City public school educated-kids have gone on to the Ivy League.

And I totally understand the attraction to private schools … our son is heading to Kindergarten in the fall and I have toured public and private schools in my area.

I’ll be the first to admit that I find the NYC schools a little intimidating and BIG. Of course I worry that he’ll be bored or fall in with “bad” kids. The whole process is extremely stressful.

But I have done the math, and taken the highest-priced schools off the list. It’s just not the best thing for the whole family.

If you are considering private school, please consider the effect on your entire financial picture. If you can afford it, great! But if you are not sure, think long and hard before making a 13-year financial commitment.

Good luck!

The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Sara Stanich, CFP® and not necessarily those of RJFS or Raymond James. You should discuss any tax or legal matters with the appropriate professional.

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Sara Stanich

Founder at Cultivating Wealth

Sara is a CERTIFIED FINANCIAL PLANNER™ practitioner, Certified Divorce Financial Analyst, and founder of Cultivating Wealth.

She lives in Montauk, NY with her husband, 3 kids and Labrador puppy.

Can You Afford Private School?