Financial Aid and Student Loans for Private High School

Private high school tuition can put a substantial strain on your family budget. According to the National Center for Education Statistics, the average annual tuition for private secondary schools was $15,420 in 2020-21. To help cover the cost, families might rely on financial aid, personal loans, tuition payment plans, or savings from a 529 plan.

If you're exploring private high school loans for your child, here's how to compare your financing options and choose the right strategy for your budget.

Can you get a loan for private high school?

For many families, taking out a loan can make private high school tuition more manageable, especially if the school doesn't offer its own financing options.

Some parents put tuition on a credit card, but that can lead to high interest charges if the balance isn't paid off quickly. A private education loan may offer lower interest rates and more predictable monthly payments.

Traditionally, K-12 private education loans were “quite rare,” according to Todd Moritz, who has worked as the CEO of several large private Christian high schools in Los Angeles County.

While some lenders have started offering more of these loans, many parents still aren't aware they exist, which is why Moritz sees parents turn to other loan options.

“Some families take out a HELOC, a home equity loan, or a personal loan to help pay their tuition,” he says.

Types of loans for private school tuition

If you're considering borrowing to pay for private high school, you generally have two loan options to choose from:

• K-12 education loans from private lenders: These unsecured personal loans are designed specifically for families paying private school expenses. You can use the funds for tuition, uniforms, supplies, and other education-related costs. Lenders that offer K-12 education loans include LightStream, Republic Finance, and Your Tuition Solution.
• Personal loans: Some families use a general personal loan to cover private school tuition. While these loans typically can't be used for college costs, they're allowed for K-12 expenses.
• Home equity loans or home equity lines of credit (HELOCs): If you own a home and have built up equity, a home equity loan or HELOC could offer lower interest rates than unsecured loans. Because these loans are secured by your home, they're often one of the least expensive borrowing options available.

Pros and cons of using loans for private school

Taking out a loan to pay for private K-12 education isn't the right move for every family. Before you borrow, weigh the potential benefits and drawbacks.

Alternative ways to pay for private school tuition

If you're unsure how to cover private school costs, a loan isn't your only option. Here are a few other ways to help make tuition more affordable:

• Financial aid: Most private schools offer need-based aid to eligible families. “Schools typically have a limited budget for need-based financing, so be sure to apply early,” advises Moritz.
• Scholarships: Many private K-12 schools offer scholarships, which are a form of gift aid that doesn't need to be repaid. “Scholarships can range from aid for legacy students and academic achievement, to other creative types of support,” says Moritz.
• Tuition payment plans: Some private schools let families spread tuition over monthly or quarterly payments instead of paying everything upfront. However, “many schools will likely pass a fee along to the family for using a payment plan,” cautions Moritz.
• 529 plan distributions: A 529 plan is a tax-advantaged education savings account that allows families to save for education expenses. You can use as much as $10,000 per year from a 529 plan to pay for K-12 private school tuition or college tuition.

How to choose the right high school loan

Paying for private school can be a major investment, so it's important to weigh your financing options carefully. Here's what to consider before you borrow:

• Rates, terms, and lender requirements: The total cost of a loan depends on factors like interest rate, repayment term, fees, and eligibility criteria. Compare lenders to find an option that fits your financial situation.
• Budgeting: Consider how a monthly loan payment or a school payment plan fits into your current budget, and make sure the payments are manageable without putting stress on your finances.
• Long-term impact: Whether you take out a loan, use 529 funds, or pay out of pocket, your choice can affect your ability to save for college, cover other bills, or reach financial goals. Think through the trade-offs before committing.