How do people afford private schools?

[Anonymous]

Anonymous wrote:

Anonymous wrote:Grandparents pay? Isn't it kind of embarrassing to be financially dependent on your parents in your 40s and 50s? Especially if you went to a top 20 college or university. With that caliber of education, shouldn't you be set for life? I thought that was the whole point.

It's (yet another) way to pass along money without incurring taxes. It's coming to the kids sooner or later.

+1 We support our parents financially so don't receive funds from them, but we will certainly take advantage of this to transfer our wealth to any future grandchildren without contributing to their or our children's tax burdens.

[Anonymous]

Anonymous wrote:

Anonymous wrote:We both are relatively high earners (combined HHI was 1.4M last year). We don’t have family money and both took out loans for both undergrad and law school (paid off).

Not going to lie — even at that income the monthly tuition bill is painful. It’s just a really absurd amount of money.

How can it be painful with that HHI? Even if you have 4 kids in private school and are paying $220,000 per year, I don't really understand how it is painful.

If you do the 10 installment tuition payment plan, and only have 2 kids, you’re still looking at $10k a month. Which is a big nut, even with lots of money. Plus, you pay a ton of taxes…

[Anonymous]

For a different purpose I went down the rabbit hole of income percentiles. $200k a year puts you in the 94th percentile, with 6% earning more than you do. 100k is only 77th percentile.

There's a lot of high earning, dual income households making in excess of 400k a year. Dual doctors, dual lawyers, dual corporate execs. Or a doctor making 250k married to a corporate manager making 150k.

You get the idea.

[Anonymous]

Anonymous wrote:Grandparents pay? Isn't it kind of embarrassing to be financially dependent on your parents in your 40s and 50s? Especially if you went to a top 20 college or university. With that caliber of education, shouldn't you be set for life? I thought that was the whole point.

As others have said, it’s really a clever way to redistribute wealth without paying taxes. We don’t have a private school “tradition” in our family but I don’t have a problem with it — it doesn’t seem that different from help with weddings, housing down payments, or other cash gifts that are normal in many families with money. At a certain point, if you’re an empty nester with money, what is it all supposed to be for?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Grandparents pay. We could afford it on our own but it helps with their estate planning.

How?

Because the grandparents can pay the school directly tax free and it doesn’t count towards the inheritance limit. So if you suspect you will leave behind more then the estate tax exemption, it is a smart way to spend your money.

Ohhh. That's a level of wealth that I'm not familiar with. With all sincerity, thanks for the explanation!

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Grandparents pay. We could afford it on our own but it helps with their estate planning.

How?

Because the grandparents can pay the school directly tax free and it doesn’t count towards the inheritance limit. So if you suspect you will leave behind more then the estate tax exemption, it is a smart way to spend your money.

Ohhh. That's a level of wealth that I'm not familiar with. With all sincerity, thanks for the explanation!

It's a level of wealth that you think you are not familiar with. With the reduction in the exeption amount on Death taxes many many people in the DMV will be paying (or their estates will). You know them as they are all around you.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Grandparents pay? Isn't it kind of embarrassing to be financially dependent on your parents in your 40s and 50s? Especially if you went to a top 20 college or university. With that caliber of education, shouldn't you be set for life? I thought that was the whole point.

No. This is a way to distribute wealth. I have a friend whose parent pay for three kids. Pay for vacations too. Parents are both biglaw partners. Could pay but they get to do other things with that money. Good way to get around death taxes at least to some extent.

So, you’re “distributing wealth” by taking their money and shoveling it into a hole for 13 years, when free public schools are available next door. They could have just gifted you money every year up to the gift tax limit. You’ve actually lost an enormous amount this way.

Most people who do this also gift money to the tax limit every year for children, spouse, and grandchildren.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Grandparents pay? Isn't it kind of embarrassing to be financially dependent on your parents in your 40s and 50s? Especially if you went to a top 20 college or university. With that caliber of education, shouldn't you be set for life? I thought that was the whole point.

As others have said, it’s really a clever way to redistribute wealth without paying taxes. We don’t have a private school “tradition” in our family but I don’t have a problem with it — it doesn’t seem that different from help with weddings, housing down payments, or other cash gifts that are normal in many families with money. At a certain point, if you’re an empty nester with money, what is it all supposed to be for?

This was great perspective.

[Anonymous]

HHI of only 170k it’s really hard so did public school for elementary and now transitioning to middle school.We are going catholic school because it’s in our price range. We would need so much financial aid to cover an independent school. Maybe we will try for high school.

[Anonymous]

Sacrifice

[Anonymous]

Anonymous wrote:We both are relatively high earners (combined HHI was 1.4M last year). We don’t have family money and both took out loans for both undergrad and law school (paid off).

Not going to lie — even at that income the monthly tuition bill is painful. It’s just a really absurd amount of money.

Relatively!?!?!?!?!

[Anonymous]

My spouse is a big law partner, so HHI is high (about $2 mill). This is how we afford private school ($50k+ per kid) for 4 kids. I think most non-lawyers are clueless about how much an average equity partner makes in a big law firm.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Grandparents pay. We could afford it on our own but it helps with their estate planning.

How?

Because the grandparents can pay the school directly tax free and it doesn’t count towards the inheritance limit. So if you suspect you will leave behind more then the estate tax exemption, it is a smart way to spend your money.

Ohhh. That's a level of wealth that I'm not familiar with. With all sincerity, thanks for the explanation!

It's a level of wealth that you think you are not familiar with. With the reduction in the exeption amount on Death taxes many many people in the DMV will be paying (or their estates will). You know them as they are all around you.

The limit this year is $13 million. Many many people are not leaving $13 million estates

[Anonymous]

School choice is a real trigger for a lot of people.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Vent post: after receiving our financial aid determination—less than I'd hoped—the sticker shock of how much this is going to cost is sinking in... How do people afford this?

Oh reality just set in! Should have did the worst case budget before even applying. If you need aid to attend, you can't afford it. That's just the truth. Don't put your family in a hardship position.

+1

Most of the kids that do well from here do well because of THEIR connections (family, family friends, etc, always the generation older, never the kids). Don't think for a second your kid will 'make' connections that enable them to do better. YOUR kid will do the same regardless of their school. If you are 'just' MC, your kid has the same chances as you public or private. They will have better college acceptances from public school too. (Colleges want many schools represented, so they will take the top from your private school and normally it's the connected kids. Public school kids are less likely to be connected, so if your kid is the top, their chances are better). Now when your kid (or you) have the connections through the business they established AND that business is successful, then the 'right' connections will find you family. This is really obvious to the most casual observer. Stop and observe, you'll see.

BTW I send my kids private prek-8 and I'm definitely not a 'connected' family. I do so for child specific reasons and better teachers, smaller classes. My older kids switch to public in HS, when they need to learn to swim in bigger more competitive, ruthless waters (selective publics) - this will be their life and they need to be prepared for it.

I disagree with this. Being surrounded by high achieving kids and family might not guarantee great connections, but it will set the stage for what they want to achieve in life.

Being surrounded by success, will will push kids to aim higher. Maybe the same happens at some good public schools too in certain neighborhood, but it would not have happened at mine