Private School During the Pandemic: Visiting an Old Debate

By Jimmy Turner, MD
The Physician Philosopher

Before we get today’s post on private versus public schooling during the pandemic, I wanted to mention an AWESOME opportunity for readers.  Today (7/27) there is a FREE masterclass on How to Invest in Real Estate without Being a Landlord.  This free masterclass is happening today, Monday July 27th, at 5:30pm PT (8:30pm EST).  Don’t miss out!  Click here to register.

One major difference at The Physician Philosopher compared to many other financial blogs is that I have zero problems encouraging people to spend money.  Lots of money. Even when it comes to the age-old debate of private school versus public school. Personal finance is personal.  Any decision to spend simply has to be matched by the value of the money you are spending.

Now that a pandemic has struck, the debate has become even more interesting.  I’ve started fielding questions left and right about paying for private schooling due to the restrictions placed on public schools.

Is the value of private school education even better because of COVID?  If so, what ways are there to pay for the sometimes enormous cost?  Let’s take a look!

First Things Are First

In Medical Degree to Financially Free, I teach a four-step wealth building formula to my students:

  1. Earn a Doctor’s paycheck.
  2. Spend less than you earn so that you can save 30% of your take-home pay.
  3. Save the difference to allow you to get to your financial goals.
  4. Spend lavishly on the things you love and that bring you value.

As long as the money being spent is providing value – and it is being spent after your financial goals have been met – I encourage people to spend as much as their heart desires on things that they love or that will provide them and their family value.

With this in mind, it is time to finally address the private versus public school debate.

Public Versus Private School Value

In non-pandemic times, this debate is interesting.

Does private school really provide enough value to make the cost worth it over what public school has to offer?  Let’s attack this first before we discuss how the pandemic has changed this debate.

Before I answer this question, let me go ahead and get my bias out of the way.

Kristen and I were both products of public school education – at least through high school.  Kristen is also an early childhood coach for 8 public elementary schools where we live.  Our 3 kids all attend public school.

The argument that is made for the value of private school often falls into one of a few buckets:

  • The public schools in my area are terrible.
  • Private schooling provides amenities that don’t exist in public school.
  • Faith-based arguments for surrounding children with people with similar beliefs.
  • Smaller class sizes and more attention on my kid.
  • I went to private school; my child is going to attend private school, too.
  • Better chances of getting into college (not sure if this is true, but the argument is utilized).

Regardless of the veracity of these arguments, it ultimately boils down to this.  People pay for private school because they find value in private school that is worth the cost to their family.

The Math of Private School vs Public School

Now, this is a personal finance blog.  So, let’s not skip the math.  Nobody gets a pass on that.

If your child attends a private school, and it costs $10,000 per year for 12 years.  Let’s look at the ultimate cost of that had that money been placed somewhere else.

If you planned to save this amount of money for your child’s college education instead over that 12 year period,  how much would that decision cost you? Well, that $10,000 per year (or $120,000 total saved over 12 years) would turn into $189,500 – assuming only a 6% rate of return on your money – by age 18.

If that money was instead placed into a taxable account for your retirement, the math gets much worse.  Let’s say that the $189,500 was allowed to continue to grow another 20 years prior to your retirement.  Without adding another dime to that pot of money, it turns into ~$644,000.

So, depending on how that money would have otherwise been saved, the $10,000 annual cost of sending your child to private school costs between $189,500 and $644,000.

Those are the numbers you must consider when determining the “value” or private school. Obviously, the numbers can double or triple for families with more than one child in this situation.

Are the arguments laid out above (bad public schooling, better chances of success, etc) worth that kind of money?  It depends on what you want for your child and the cost to value you see in the decision.  Personal finance is personal.

…yet, how does the private versus public school debate change now in pandemic times?

The Pandemic Effect on Private vs Public School

An interesting twist has taken place in this debate due to the COVID pandemic.

All of a sudden, the decision isn’t as simple as private versus public school.  The decision has often become in-person schooling (private school) versus virtual learning (public school).

How has this happened?  Well, private schools are not held to the same rules and standards as public schools.  They are not paid for by the state government and our taxes.  For this reason, they can operate independently of what is being required of public schools.

In the current environment, what this has amounted to in many states is that the smaller, more-controlled private schools are still offering in-person education with mandated social distancing (possible due to larger buildings and smaller class sizes) while many public schools are forcing students to stay home.

Now, the purpose of this post is not to debate whether students should stay home or go to school.  Many of us have our opinions on that subject from both a medical and parental perspective.

However, for those who do think it is okay to send their child to school, private schooling is now potentially offering some very real and easily measured value over public school education.

So, if you have decided to brave the pandemic elements by sending your child to in-person private schooling because they otherwise would have had only virtual learning made available to them, how should you go about paying for this cost?

Here are some ways to consider footing the cost.

1. Using Your 529 Plan for Private School

One way that recently became available to parents to pay for private schooling is through your 529 plan.  Starting in 2018, parents were allowed to use 529 plans – which were previously reserved for a college education – to pay for K through 12 schoolings.

The amount is limited to $10,000 per year, however. So, if your private schooling costs $20,000 you will only receive the specialized tax-treatment on the $10,000.

However, it gets a bit more complicated.  Not every state allows for the $10,000 to be used on private school education for K through 12.  Some states limit it to a much smaller number. Others don’t allow the use of this money from your 529 plan as a qualified use at all.

If your state doesn’t allow for this, you may have to pay state income tax on any earnings used from the 529 to pay for private school.

2. Cash Flow the Expense

The simplest way to pay for private school is to cash flow the expense.  If you have more than a $1,000 margin between your earning and spending each month, this is the simplest solution.

If not, you may have to give that country club membership up or sell that BMW M5 for a prius.

Either way, while this is not the easiest solution, it is certainly the simplest.  And it may be the best solution, particularly for those banking on a vaccine who only intend to put their child(ren) in private schooling for just one year while this all gets sorted out.

It also keeps any college savings for your child intact.

3. Your Taxable Account

For anyone who has been saving money inside of a taxable account, this money is available to you to pay for school.  Any money that you put in has already been taxed.  However, you must be careful about the gains made inside this account.

Any gains that have been made in less than 12 months are considered additional income and taxed at your ordinary tax rate.  However, if it has been in the account for longer than 12 months, you have the benefit of capital gains tax rates, which are usually much lower.

At the time of this writing, long-term capital gains tax rates are as follows:

  • Income < $78,750 – taxable gains rate = zero percent
  • $78,750 – $434,500 single ($488,850 married)  = 15%
  • >$434,500 single ($488,850 married) = 20%

These rates are much better than the average/effective tax rate most doctors see (usually in the 20-30% range) and substantially better than most doctors marginal tax rate (30-50% range in states with income tax).

So, if this is a part of the plan… make sure to avoid short-term capital gains and utilize the long-term capital gains rates instead.

Take Home: Private School vs Public School

In the current pandemic climate, the in-school education versus virtual learning decision has added a new wrinkle to the private versus public school debate cost/value debate.

However, the basic nature of the argument remains the same as any other financial decision.

If you feel that the value you are getting for the money you spend is worth the cost (and the potential sacrifice to your long-term savings), then spend lavishly on what provides you value and satisfaction.

Just don’t forget that there are multiple options when determining how to pay for the cost!

Are you considering a private school for the year?  How do you plan to pay for the cost? Public school all the way? Leave a comment below.



  1. Erith

    Multiply that x 2 for 2 children, add in 4 years college. I put my kids through private day school in UK for 13 years, followed by funding university. Fees that started at £1k p.a became £7k p.a at the end of school and uni costs not much different. Oldest started school in 1987, youngest left university in 2007. So elapsed 20 years, say average £10k = £200k. All paid from taxed income (40% for a lot of it) => nearer £300k earnings. It seemed like the best thing to do for them, at the time…

    Financially very poor move though! Over 20 years, I could be easily have made that become £1-£2m using tax free accounts / pension funds, good investments… Maybe they would rather have received the lump sum when they were grown up and bought a house with the cash!?

    But then some of our local state schools weren’t great, and who knows how they would have turned out. Today, they are happy, well balanced individuals, in good jobs. I’m happy with the outcome. It’s only money! Might make a different decision today tho!

    • ThePhysicianPhilosopher

      It is hard to say, right? The retrospectiscope is 20/20 but who knows what would have happened if you went a different route. Sounds like all is well that ends well, but making this decision going forward can prove challenging. The math is what it is, though.

  2. Liz

    Our kids are preK and k. Zoom preschool and kindergarten? No thanks. Spring was no fun. They were already enrolled in a small private school for its particular curriculum strong in math fundamentals and phonics and long tenured early ed teachers. Class size 7 to 12. Yes, please. I am not a physician but we live in an exurban area and I feel comfortable sending my kids into this environment. School will certainly go better if it is not done by their parents. We pay a little under $12k a year for both. Many places that are not HCOL have such options, often connected to churches. My kids are not at this school for the religion.

    • ThePhysicianPhilosopher

      I think that is exactly where many parents are right now because of the current environment. It is a challenging decision – and while no one gets a pass on math – it may prove to be the right decision for many people.

  3. Psy-FI MD

    We’ve thought a lot about this debate. Both of us are products of public school education in the NE.

    We were toying with private schools for the pandemic but heard there’s a real chance they could shut down and go virtual. Not worth it for us to shell out money and then pay a tutor on top for education.

    Here’s something that has come up. Due to classes going half virtual/half in person, there are having education “pods” opening up. They allow up to 10 kids and will have social distancing. Their charge is less than private school and the day mimics regular school days. The one we signed up for has coding camp after our kid’s virtual learning.

    We’ll see what happens (fingers crossed)…


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