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K-12 Private School Loans: Review The Options

Hanna Kielar5-Minute Read

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One of the major decisions that many parents make for their children is whether to enroll them in public or private school. Some parents are interested in the small class sizes and personalized learning touted by private schools, while others prefer the religious learning environment provided by some private institutions.

But private education comes with a hefty price tag. In 2021, the average private elementary school tuition was $10,645 per year, and the annual private high school average was $15,112, according to Private School Review

If you’re set on enrolling your child in private school but can’t afford to pay out-of-pocket, there are several other ways to finance a private education. Let’s review the payment options for covering private school tuition.

How Much Does Private K-12 Education Cost?

As mentioned above, private school tuition can cost tens of thousands of dollars per year. However, it’s important to keep in mind that the annual cost varies by school and state. According to Private School Review, the average private school tuition in Arkansas is $6,107 per year, while the annual average in Connecticut is $26,411.

When calculating the cost of sending your student to private school, don’t forget to account for other education-related expenses. Be prepared to cover the following costs:

  • A laptop, tablet or other type of computer 
  • School supplies
  • Extracurricular activities
  • Textbooks and e-books

3 Ways To Lower The Cost Of K-12 Private Education

Before you apply for a loan for any type of private education, be sure that you’re receiving the lowest tuition rate possible. Here are a few ways to potentially lower the cost of K-12 private education.

1. Financial Aid

Similar to financial aid programs for college education, many private schools offer financial aid to families who need help covering the cost of elementary through high school tuition. Prior to the start of the school year, parents must submit an application with their financial information to the school in order to qualify for partial or full financial aid.

If you’re interested in applying for financial aid, research each school’s application deadlines and qualification requirements. 

2. Scholarships

Scholarships are tremendously helpful tools for lowering the total cost of attending a private school. Many private schools offer both need- and merit-based scholarships for students who qualify. 

In addition to applying for scholarships through the school, K-12 students can also qualify to receive scholarships from third-party organizations, religious communities and community organizations. Plus, there are many regional and state scholarship programs available to students who meet the specified criteria.

3. Tax Credit Programs

In several states, there are tax credits and deductions that parents can use to receive income tax relief for educational expenses, including private school tuition. According to EdChoice, the current states with individual tax credits and deductions are Alabama, Illinois, Indiana, Iowa, Louisiana, Minnesota, Ohio, South Carolina and Wisconsin.

To take advantage of the tax relief programs, research the qualification requirements in your state and consult a tax expert if necessary.

Types Of K-12 Private School Financing

After you’ve done what you can to lower the cost of your child’s K-12 private education, you can consider other payment methods to finance the remainder. Let’s take a look at some of the top options.

K-12 Education Loan

Due to the rising cost of private education, the banking company Sallie Mae and other online lenders have started offering K-12 education loans. This specialized loan allows parents to take out a loan for up to 100% of the school-certified cost per year. 

However, unlike personal loans, some K-12 education loans have variable interest rates. That means that the loan’s monthly payment could change over time, instead of having a fixed rate for the life of the loan. Before committing to a K-12 education loan, be sure to shop around to find the best interest rate and loan terms.

Personal Loan

personal loan is a popular way to pay for a private elementary through high school education. Since this type of unsecured loan is available for any kind of major purchase or investment, you can use the loan amount to pay for everything from tuition to textbooks. This option is available through most banks, online lenders and credit unions.

Another major perk of this payment option is that once you’re approved for the elementary or high school student loan, you’ll receive a lump sum payment within a few business days.

 

Keep in mind that the personal loan terms are determined based on your creditworthiness, meaning that borrowers with excellent credit will receive a more favorable interest rate

How To Compare Private School Loan Options

Now that we understand the primary loan options for financing a private school education, let’s evaluate the points to keep in mind when shopping around for the best option:

  • Loan terms. It’s important to find a K-12 student loan with affordable monthly payments, plus a manageable repayment term. If possible, you should avoid taking on a loan that requires you to make tuition and interest payments for several years past the school term.
  • Additional fees. When comparing loan options, don’t forget to research the cost of additional fees. Some personal loans have no extra fees, while others may charge an origination feeor prepayment penalty. 
  • Annual percentage rate (APR). Whether you’re shopping for a personal loan or an education loan, the loan’s APR should be top of mind. This represents the cost of the loan’s interest rate plus fees, and you should always seek out the loan with the lowest APR.

How Do I Get A Personal Loan Or K-12 Education Loan?

If you’re ready to apply for a personal loan or a K-12 education loan, be sure to make the necessary preparations before submitting an application. Here’s how to get a personal loan or a K-12 education loan:

  • Double-check your credit report. In order to get the best interest rate possible, you’ll need to put your best financial foot forward. Double-check that your credit report is accurate and updated prior to submitting your loan application. If you see errors on your credit report, make sure to correct them as quickly as possible. Keep in mind that lenders typically provide lower interest rates to borrowers with higher credit scores.
  • Shop around for the best loan terms. Finding a personal or education loan with the most favorable loan terms requires time and effort. Be sure to shop around for quotes from multiple lenders, even comparing personal loan terms against K-12 education loan terms to find the best deal.
  • Apply for prequalification or preapproval. Once you’ve narrowed your loan options, prequalify to receive the specific loan terms your lender is planning to offer. In some cases, it can be beneficial to apply for loan preapproval, but keep in mind that a hard credit inquirywill be reflected on your credit report.

Final Thoughts: Weigh Your Options For Financing Private Education

Let’s face it: Private K-12 education is an expensive investment in your child’s future. If you’re determined to enroll your child in private elementary or high school but you’re unable to afford the upfront costs, there are other means of managing the hefty tuition price tag.

In some cases, K-12 education loans may be a preferred payment option for borrowers who want to take out a loan for 100% of the school-certified cost. On the other hand, personal loans allow parents to receive a lump sum equivalent of their child’s tuition, and then repay the loan in fixed monthly installments.

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    Hanna Kielar

    Hanna Kielar is an Associate Section Editor for Rocket Mortgage focused on personal finance, recruiting and personal loans. She has a B.A. in Professional Writing from Michigan State University.