Private school -- what portion of income are people spending?

[Anonymous]

Anonymous wrote:

Anonymous wrote:We are the exception to the rule, but our $50,000 tuition a year makes no impact on our financial situation as we are high net worth. But I grew up LC so I do wonder about people that sacrifice retirement and travel for private school. I’m not sure it’s worth it. In particular, I would do public elementary till 4th, at least. If you are in APS or Fairfax.

Opposite right now with COVID, the younger cohorts are all struggling as their entry to the school/classroom environment was severely impacted by COVID, and for the publics it was basically over a year of virtual. Even this year being in-person, a much higher percentage of the kindergarteners are coming in without having experienced preschool and socialization and they have a lot more work to do compared to kindergarten of years past. The social dynamics of the classroom and proper classroom behavior still need to be remediated before learning can fully resume, let alone catch up. The average is way behind right now compared to privates (FWIW, ours was virtual for a few months in spring 2020, and in-person but masked 20-21 school year and first half this year).

Older kids, on the other hand, while they suffered learning loss and other mental health struggles during the pandemic, are doing a much better job of getting back to the routine and making up for lost time. That's not to say there aren't struggles or that this is necessarily true for every kid of course, but IN GENERAL the public schools are doing better for older kids RELATIVE TO younger kids right now, and I would emphasize private schools for younger kids at least for another year or two until the after effects of COVID/virtual on the public schools stabilize and diminish.

Your first two sentences are spot on which is why teachers in both private and public are struggling.

[Anonymous]

You can afford it, but being practical, it will require you to budget and/or put a dent in your spending. When we put our kids in private school, our income was probably about 1/2 yours, and we had a full-time nanny. Our expenses, however, were well less than 1/2 of yours. Keep in mind, as others have said, you will need to keep your nanny probably longer than you plan. You'll likely need a full-time nanny until your youngest is in K, and that assumes that you have a good summer plan. If not, you'll end up paying for your nanny to work full-time and she'll find other things to do around the house, so as to keep her.

I'll be honest, when our kids were in the preschool/early elementary, plus full-time nanny, it was tight and we had to watch what we spent. Our mortgage was $3500, no student loans, only one car payment, nanny about the same, and our expenses were less. But, with college savings, nanny, maxing out on retirement, and the private school, there didn't seem to be a lot left.

Now we make slightly above your current income, and I don't notice the private school payments, but our expenses still remain much less. Although our mortgage is about the same, our nanny is 1/2 as she is part-time, our car payments are less, and we don't have loans. Our kids are in year round expensive activities with lots of travel meet expenses.

I really think it comes down to what's the best fit for your kids. We have plenty of friends who have done public, and I'm envious, but our kids really needed small. In hindsight, perhaps our oldest might have done fine, but our youngest really needed a small private.

[Anonymous]

Anonymous wrote:

Anonymous wrote:We are the exception to the rule, but our $50,000 tuition a year makes no impact on our financial situation as we are high net worth. But I grew up LC so I do wonder about people that sacrifice retirement and travel for private school. I’m not sure it’s worth it. In particular, I would do public elementary till 4th, at least. If you are in APS or Fairfax.

NO, it is not worth it. No, no, no. Unless your kids have special needs, etc.
It's just not worth it.

Sounds presumptuous.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We are the exception to the rule, but our $50,000 tuition a year makes no impact on our financial situation as we are high net worth. But I grew up LC so I do wonder about people that sacrifice retirement and travel for private school. I’m not sure it’s worth it. In particular, I would do public elementary till 4th, at least. If you are in APS or Fairfax.

NO, it is not worth it. No, no, no. Unless your kids have special needs, etc.
It's just not worth it.

Sounds presumptuous.

I’ve got two in private and I strongly disagree. Our finances would be a lot stronger if I didn’t.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We are the exception to the rule, but our $50,000 tuition a year makes no impact on our financial situation as we are high net worth. But I grew up LC so I do wonder about people that sacrifice retirement and travel for private school. I’m not sure it’s worth it. In particular, I would do public elementary till 4th, at least. If you are in APS or Fairfax.

NO, it is not worth it. No, no, no. Unless your kids have special needs, etc.
It's just not worth it.

Sounds presumptuous.

I’ve got two in private and I strongly disagree. Our finances would be a lot stronger if I didn’t.

You presume others' finances and values are the same as yours = presumptuous.

[Anonymous]

Hard to say for many families, who receive financial help from grandparents. Whether it be in the form of having paid tuition for college and grad school or a downpayment on a house so that money that would be spent paying student loans or on a larger mortgage can be spent on private school tuition, or grandparents paying tuition directly to their grandchildren's schools, there seem to be a lot of families with generational wealth.

[Anonymous]

Anonymous wrote:Hard to say for many families, who receive financial help from grandparents. Whether it be in the form of having paid tuition for college and grad school or a downpayment on a house so that money that would be spent paying student loans or on a larger mortgage can be spent on private school tuition, or grandparents paying tuition directly to their grandchildren's schools, there seem to be a lot of families with generational wealth.

I don’t consider paying college tuition as generational wealth. Generational wealth is a trust fund. Educating your kid is just… being a decent parent.

[Anonymous]

Who cares. You can only guess how people pay.

Is it IMf, is it grandparents, is it a trust fund, is it crypto stock, is it w-2 income, is it savings, is it mortgage/debt, is it financial aid, is it stock dividends, is it someone’s startup share options or IPO. Whatever!

Wish people and teens knew more economics, taxes and capital markets.

[Anonymous]

We just keep donating our own wine bottles at fair value!

[Anonymous]

Anonymous wrote:We have two kids--one at home still and one in preschool, and are on the fence about whether to go the private route for both for elementary. I know we can technically afford it and whether it's "worth it" is subjective, but I'm wondering what portion of their income most private school families are paying for tuition. We take home about $25k per month after maxing out 401ks, not including year end bonuses, which are typically $100k after taxes. We have about $250k in retirement (in our mid 30s), $100k in liquid investments, $100k in illiquid investments (exit in ~3 years hopefully for 2x returns), and $600k in home equity. Our biggest monthly expenses are mortgage ($7.5k including property taxes), and a nanny ($4.2k), but I anticipate the nanny expense will go away or be significantly lower once both kids are in school in a few years. Other big expenses are our student loans ($1.2k), car payments ($1.1k), utilities ($1.5k)--other than that, we typically spend about $7k/month on groceries, home maintenance, home supplies, gas, kids lessons, medical visits, clothes, entertainment, etc. This is not spending wildly, but also not trying hard to budget. Our income will most likely continue to go up given our industries, but of course there are no guarantees. We're looking at schools that would be in the $40k range, and I realize tuition will increase every year. There are a lot of factors to the private/public decision outside of the financial piece that I won't get into.

So my question is: is our financial situation typical for families with 2 kids in private? I know we make good money, but $80k for two kids is still almost 20% of our take home after taxes. Again, I realize people have different comfort levels, but I'm curious where we fall in the range.

No idea what’s typical.

2 income HH here. After 2 max 401ks and one mega roth we net 27k/mo.

This is our 3rd home so we have a lot of equity, our PITI is $2200/mo and we run no other debt. We also have over 2M in 401ks and another 500k in mega Roth, but we are 43. So for us our income is a bit lower than yours, our foundation is a bit stronger than yours. You pay 64k more per year in mortgage than us, which is dramatic. So in a nutshell we spend 21% of our net in tuition, plus we do donate about 10k/yr.

I guess this illustrates why it’s impossible to compare. Everyone has different expenses, prior savings rates, and school debt.

[Anonymous]

Correct, it’s how you choose to spend your money and how much money you have.

People might be flush due to home prices run up, if pulled down a heloc or sold and moved away

[Anonymous]

Anonymous wrote:

Anonymous wrote:Hard to say for many families, who receive financial help from grandparents. Whether it be in the form of having paid tuition for college and grad school or a downpayment on a house so that money that would be spent paying student loans or on a larger mortgage can be spent on private school tuition, or grandparents paying tuition directly to their grandchildren's schools, there seem to be a lot of families with generational wealth.

I don’t consider paying college tuition as generational wealth. Generational wealth is a trust fund. Educating your kid is just… being a decent parent.

My working class, immigrant parents were "decent parents" who could not afford to pay for my college tuition. Are you really so out-of-touch that you have no clue how many "decent" parents there are who struggle to pay for college?
You don't seem to understand how much of a burden college and graduate school loans are for many, many people and how much of an advantage graduating from college and graduate school without debt is for creating generation wealth.

[Anonymous]

Private school is definitely luxury expense. DD's now in college, but when she started in JK we decided it was affordable because it cost less than 10% of our gross income. Back then, tuition was under $20k. By the time DC was a senior, tuition was about $45k. But, our earnings grew faster than tuition and we were paying a much smaller share of our income. If our earnings didn't grow that much, we would have switched to public for high school in order not to stress about college expenses ($75k!). Neither our house nor our cars would wow anyone, so we probably could have easily stretched it to 20% of gross if we had two kids.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Hard to say for many families, who receive financial help from grandparents. Whether it be in the form of having paid tuition for college and grad school or a downpayment on a house so that money that would be spent paying student loans or on a larger mortgage can be spent on private school tuition, or grandparents paying tuition directly to their grandchildren's schools, there seem to be a lot of families with generational wealth.

I don’t consider paying college tuition as generational wealth. Generational wealth is a trust fund. Educating your kid is just… being a decent parent.

Most parents cannot afford to pay for college. The delusion is real. I’m fact most parents don’t save because they don’t have extra money to save.

[Anonymous]

Ouch!! Our bank account just got hit with our first tuition payment of $4,200. This is going to be our monthly payment for the next 10 months. We are a one earner family which nets between $800K and $950K a year depending on bonus. Bonus is deferred and health insurance 100 covered. Our monthly take home is around $25K. No debt beyond a $2,500 monthly mortgage. We drive 7 year old cars and no country club membership. So I think we are good for another 4 years of private school. College is funded through 529.