Private School for your Child
Robert M. Witt, executive director,
A Good Investment
Today’s parents understand the urgency surrounding their choice of a school that will prepare their child to live a purposeful and meaningful life in the knowledge-based economy of the 21st century.
Parents choosing one of Hawaii’s 124 private schools (including the Catholic elementary schools) understand that the best education is a values-added experience: one that provides a structured, nurturing environment, where young people learn not only reading, math and science, but also the importance of hard work, leadership, moral courage, social responsibility and good citizenship.
Hawaii’s private schools provide a choice to parents. Schools differ from one another because of their unique missions and philosophies. Some are selective in their admissions, enrolling students whose previous school records show a high level of academic success. Others accommodate children who show academic promise and potential. Still others offer programs for students who encounter challenges. Collectively, Hawaii’s private schools are a rich marketplace of programs and services, representing an invaluable investment for parents.
Speaking of education as an investment, private schools in Hawaii are accountable to their individual boards of trustees, to the parents who pay tuition, and to the entities that accredit them. These same schools are affordable and accessible, and they are committed to enrolling an ethnically diverse student body. Most families who invest in a private education do not have high incomes, and many receive some tuition assistance.
Graduates of Hawaii’s private schools do well in college in rigorous courses of study, express strong satisfaction with their careers, are confident in their ability to meet future training needs, are adept at lifelong learning, are skilled in the technology of the 21st-century workplace, pursue healthy, active adult lives, and place the highest value on community service and civic engagement.
Alan Kodama, CLU, CFS,
Big Financial Tradeoffs
The decision to send a child to private or public school has been a topic of debate throughout the 23 years that I have been a financial adviser helping clients with education planning.
With private-school tuition averaging $16,500 for grades K-12, it is one of the biggest investments that parents will make for their children. For clients thinking of paying the tuition each year, we discuss various scenarios to determine the best use of assets to meet all their goals.
For example: If your child enrolled in private school from kindergarten to grade 12, starting with a tuition of $16,500 per year adjusted for 3 percent annual inflation, the total expense by the time he or she graduated would be approximately $258,000. If you invested the same amount at a modest 7 percent average rate of return for 13 years, your investment would grow to approximately $332,000 by the time your child finished high school.
Assume that, after high school, your child enters college using loans that he or she will be responsible for paying after graduation. You keep the college savings account invested at 7 percent until he reaches age 60. This same account would grow to approximately $5.7 million. Along the way, you have the option to tap into these funds to help your child pay off the student loans or purchase a home.
If paying the private-school tuition for 13 years leaves little room for saving, will you be OK with postponing your retirement another five to 10 years or giving up annual family vacations? I have met with parents who struggled to keep their children in private school and are now leveraging their home equity to pay for college while retirement is approaching and appears unlikely to happen on schedule.
It is never too late to begin financial planning. Don’t wait until you finish one goal before focusing on the next. Look at your entire financial situation and all your goals at the same time to determine the best approach.
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