When will Private Schools' bubble burst ?

[Anonymous]

As most people on this forum are keenly aware, Private school tuition has climbed from 24K in 2006 to 35K-40K a year in 2013 ( nearly doubled in the last 6 years) . Many upper middle class families with incomes in 250K to 350K range feel priced out, particularly if they have 3 kids.

My question: are these schools using this money wisely ? Have the schools started to hit a tuition figure of diminishing return ( its so high they have to give more and more FA, to get the families they need/want) Why not just charge less, and give less FA ?

Is FA REALLY where this money is going in these "non-profits".

Something smells. I sense a bubble about to burst and last time I felt that way was 2005, 2006.

[Anonymous]

I don't know the answer, but I hope you're right. We're a $350k HHI family with 2 kids in private and feel like it's a struggle to pay tuition every year. If it goes much higher, we won't be able to do it anymore.

[Anonymous]

This same exact thread has been started every year for the past at least 5 years with someone always claiming the bubble was just about to burst.

You can abandon hope that will happen.

[Anonymous]

Anonymous wrote:As most people on this forum are keenly aware, Private school tuition has climbed from 24K in 2006 to 35K-40K a year in 2013 ( nearly doubled in the last 6 years) . Many upper middle class families with incomes in 250K to 350K range feel priced out, particularly if they have 3 kids.

My question: are these schools using this money wisely ? Have the schools started to hit a tuition figure of diminishing return ( its so high they have to give more and more FA, to get the families they need/want) Why not just charge less, and give less FA ?

Is FA REALLY where this money is going in these "non-profits".

Something smells. I sense a bubble about to burst and last time I felt that way was 2005, 2006.

If the last time you felt this way was 2006, and tuitions have now doubled with applications going up, perhaps your analysis is off...

[Anonymous]

Anonymous wrote:

Anonymous wrote:As most people on this forum are keenly aware, Private school tuition has climbed from 24K in 2006 to 35K-40K a year in 2013 ( nearly doubled in the last 6 years) . Many upper middle class families with incomes in 250K to 350K range feel priced out, particularly if they have 3 kids.

My question: are these schools using this money wisely ? Have the schools started to hit a tuition figure of diminishing return ( its so high they have to give more and more FA, to get the families they need/want) Why not just charge less, and give less FA ?

Is FA REALLY where this money is going in these "non-profits".

Something smells. I sense a bubble about to burst and last time I felt that way was 2005, 2006.

If the last time you felt this way was 2006, and tuitions have now doubled with applications going up, perhaps your analysis is off...

I guess you missed what I was alluding to even though I referenced it twice.

1) "bubble" refers to "real estate bubble
2) burst refers to real estate bubble bursting
3) 2005 refers to peak in housing market. You know , that time when even your average well off family started saying, " you know what, this is crazy, these homes are over priced, we're not gonna buy right now"

I hear that kind of talk right now about Private School tuition and from the same kinds of Upper middle class to slightly well off people. I think that that is significant and these schools , if they are smart, will take a hard look at what their financial decisions are about to cost them before it is too late.

To paraphrase Walter Cronkite, " they are losing Peoria"

[Anonymous]

Anonymous wrote:I don't know the answer, but I hope you're right. We're a $350k HHI family with 2 kids in private and feel like it's a struggle to pay tuition every year. If it goes much higher, we won't be able to do it anymore.

We make about $300K and won't send our 2 kids to private for this reason, although it would be much better for them if we could (for different reasons for each one). You've validated my feeling that we can't really afford it. Thanks!

[Anonymous]

Anonymous wrote:

Anonymous wrote:As most people on this forum are keenly aware, Private school tuition has climbed from 24K in 2006 to 35K-40K a year in 2013 ( nearly doubled in the last 6 years) . Many upper middle class families with incomes in 250K to 350K range feel priced out, particularly if they have 3 kids.

My question: are these schools using this money wisely ? Have the schools started to hit a tuition figure of diminishing return ( its so high they have to give more and more FA, to get the families they need/want) Why not just charge less, and give less FA ?

Is FA REALLY where this money is going in these "non-profits".

Something smells. I sense a bubble about to burst and last time I felt that way was 2005, 2006.

If the last time you felt this way was 2006, and tuitions have now doubled with applications going up, perhaps your analysis is off...

I don't think applications are going up. I bet they are down over all, particularly for Pre-K through grade 3 . I'd also bet schools are stomaching a lot more wealthy,but wack job parents that they would have passed on before. Decisions like that make it hard on teachers and good teachers and quality Admin who are not ass kissers start leaving. Sooner or later, purely catering to the uber rich who think and operate like they basically own you, is bad for education.

Its kind of like what happens when a bad element moves into a neighborhood. Pretty soon, everyone else leaves and THEN, you are stuck.

[Anonymous]

I do not believe real estate market analogy would work for private education.

First, returns to private/public education is not necessarily observable.

Second, if there is "mispricing", prices will adjust, nobody would go bankrupt since you cannot short sell or go long education.

Third, the unlike the real estate market system is not inherently unstable since one cannot earn profits from price falls.

Finally, are the schools unable to fill up positions? Judging from all the wait-list excitement in the forum, I think not. There is still excess demand for better quality education. That is why prices of houses at good school districts did not fall compared to the rest of the nation even at the peak of the crisis.

[Anonymous]

Anonymous wrote:I do not believe real estate market analogy would work for private education.

First, returns to private/public education is not necessarily observable.

Second, if there is "mispricing", prices will adjust, nobody would go bankrupt since you cannot short sell or go long education.

Third, the unlike the real estate market system is not inherently unstable since one cannot earn profits from price falls.

Finally, are the schools unable to fill up positions? Judging from all the wait-list excitement in the forum, I think not. There is still excess demand for better quality education. That is why prices of houses at good school districts did not fall compared to the rest of the nation even at the peak of the crisis.

I think you are deliberately taking my argument too literally because you want to avoid tackling my main point:

Private schools have as their back bone ( and bulk of parent pop) the upper middle class, and they are losing them.

And another thing, Mom and Dad both billing 60 hours plus a week just to pay 120K a year for elementary school tuition is bad for kids. The thing kids need most is their parent's time. These tuition hikes are causing families to not spend as much time together.

[Anonymous]

Does anyone have any insight into why tuition has almost doubled in 6 years? I doubt the faculty are getting that much of a raise, property taxes have decreased, what is costing the schools so much money that they're increasing tuition this quickly?

I'm afraid it's about building the prettiest and best athletic or arts facility that most colleges don't even have. Is that what's going on?

[Anonymous]

Is Private School Enrollment Generally Down? 03/2011

Is private school the next bubble? 02/2012

Article from The New York Times: Is Private School Not Expensive Enough? 12/2012

[Anonymous]

Anonymous wrote:Is Private School Enrollment Generally Down? 03/2011

Is private school the next bubble? 02/2012

Article from The New York Times: Is Private School Not Expensive Enough? 12/2012

Yes, it's on a lot of people's minds and its getting worse, not better.

[Anonymous]

Anonymous wrote:Does anyone have any insight into why tuition has almost doubled in 6 years? I doubt the faculty are getting that much of a raise, property taxes have decreased, what is costing the schools so much money that they're increasing tuition this quickly?

I'm afraid it's about building the prettiest and best athletic or arts facility that most colleges don't even have. Is that what's going on?

Exactly, a teacher raise is usually about 2to 4 percent every few years, so that alone does not explain a near doubling of tuition in just 6 years.

[Anonymous]

We are leaving our parochial school because the administration is keeping significant discipline problems who pay full freight while admitting more discipline problems and reducing their tuition in order to keep numbers up. The school has been bleeding students for several years. We are leaving for another private though.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I don't know the answer, but I hope you're right. We're a $350k HHI family with 2 kids in private and feel like it's a struggle to pay tuition every year. If it goes much higher, we won't be able to do it anymore.

We make about $300K and won't send our 2 kids to private for this reason, although it would be much better for them if we could (for different reasons for each one). You've validated my feeling that we can't really afford it. Thanks!

We make 150000 a year and send dc to private school because it benefits him. It's not easy but we do it. Tuition is 30k for first grade. It's a matter of priority.