Why parents of private-school kids aren't put off by rising tuition

Data suggest no effect on enrollments

The average private-school tuition in the U.S. is now just shy of $10,000 a year -- more than the average sticker price for a public university.
The average private-school tuition in the U.S. is now just shy of $10,000 a year -- more than the average sticker price for a public university.

Few things generate as much angst for parents as how to pay for college. But dealing with the high cost of education is nothing new if your kids spent their K-12 years in a private school.

The average private-school tuition in the U.S. is now just shy of $10,000 a year -- more than the average sticker price for a public university. Since 1988, annual increases have ranged from 2.6 percent to more than 4 percent, outpacing inflation.  

And there is no sign the trend will be reversed. In fact, while colleges raise tuition almost reluctantly, fearing a customer backlash, private schools are encouraged to embrace a price hike.

In a study published earlier this year, researchers analyzed six years of data from 259 nonprofit private schools and found almost no correlation between tuition increases and enrollment. The biggest driver of enrollmentnis how parents perceive the school’s qualities; and as long as the perception is that the money will be used to expand programs or increase teacher pay, for example, tuition hikes can be justified.

“There is an understandable concern that increasing tuition to enhance the quality of the program could drive families away,” the authors wrote. “Overall, the fear is just that, fear, and schools can increase tuition concomitant with perceived quality and expect enrollments to remain at least constant.”

As they become more expensive, private K-12 schools are struggling with same challenges faced by public colleges and universities. And, as recent data suggests, how they respond could have an impact on their quality, as well as who can gain access.

Shifting compensation

In one parallel to higher education, rising tuition at private K-12 schools has not had much effect on teacher salaries, which, adjusted for inflation, have increased only modestly. Meanwhile, private schools are spending more than ever on administrative salaries.

Per-pupil spending on administrators has risen twice as fast as spending on teachers, according to a 2016 study commissioned by the National Association of Independent Schools. In 1988, schools spent 25 cents on administrative pay for every dollar spent on teacher salaries. By 2013, administrative pay had risen to 45 cents for every dollar of teacher salary.

And as a share of total private-school spending, teacher pay fell from 41 percent in 1988 to 32 percent in 2013, while administrative salaries rose from 10 percent to 14 percent.

“In short,” said Jeffrey Mitchell, head of school at Currey Ingram Academy in Brentwood, Tennessee, “we have a larger number of administrative people in our schools and also a larger proportion of our collective staffs are administrators who, by the nature of their jobs, tend to be compensated better than faculty and staff.”

Paying the freight

About 13 percent of parents of children in private K-12 schools borrow to pay tuition (compared to 19 percent of college students and families). Most rely largely on income and savings, with some also using credit cards or gifts from family.

Not surprisingly, as private-school tuition has risen, so has the need for financial aid -- even among high-income families.

Indeed, while the number of families receiving aid packages has grown steadily, middle- and low-income families receive a smaller share of the total awarded than just a few years ago. In the 2010–11 school year, one in four financial aid awards went to families earning less than $51,000. By 2015-2016, it was just 19 percent.

Meanwhile, the share of awards to families earning more than $121,000 increased from 30 percent to 43 percent. In 2015-2016, according to the NAIS, nearly five times as many families in the top 20 percent of family incomes received need-based aid in than families in the bottom 20 percent.

“These data suggest that today’s financial-aid recipient pool is actually somewhat less socioeconomically diverse than even just five years ago,” Mark Mitchell, vice president of school & student services for NAIS. “In short, financial-aid distribution is skewing toward higher-income families.”