Average annual tuition at private schools in the U.S. is about $11,000 for day students, $40,000 for private boarding schools, and about $7,000 for Catholic K-12 schools. Approximately 15% of U.S. private school’s student population is international students. The largest concentration of private schools are in California, Pennsylvania, Florida, New York and Texas.
While the COVID-19 pandemic brought an exorbitant amount of challenges, providing educational services virtually may open new opportunities to private schools if the results can help both the students and schools.
The Tax Cuts and Jobs Act expanded the allowable uses of 529 plans, whereby $10,000 annually can now be used towards private K-12 tuition expenses. Private K-12 schools in certain states may increase their enrollment by better publicizing this. In addition, education savings accounts (ESAs) can be used for private elementary or secondary tuition or to pay for expenses for private or public school, grades K-12. ESAs allow parents to invest up to $2,000 per year of after-tax money into mutual funds and withdraw proceeds from those investments without having to pay federal taxes.
The following facts could be indicative of what private school budgeting will look like for the next few years:
Charter schools are the largest threat to the industry, especially in urban areas, since there is generally difficulty competing with an alternative that does not charge tuition. Private schools lose one student on average for every three gained by charter schools. Furthermore, as of June 2020, the national unemployment rate is expected to increase in 2020, presenting a potential threat to the industry.
As of June 2020, in 2020, the following percentage estimates of total industry revenue is expected: