By Traci Haly, Admissions Officer
As a parent, one of the most important decisions you will make is deciding where to send your child to school. If you are considering private school, you may be wondering if you could ever afford it in today's economy. However, a quality private school education may be more within reach than you think.
Here are some options that could help turn the dream of sending your child to private school into reality.
Apply for financial aid. Many schools offer financial aid. Hawaii Baptist Academy (HBA) encourages families to apply for financial aid, even if they are unsure they will qualify. The Financial Aid Committee awarded approximately $1,100,000 of financial aid to HBA students for the 2017-18 school year, with a majority of awards distributed to middle-income families. HBA applicants are notified of their financial aid award status before they make their decision to attend. Thus, parents know the exact cost for their child to attend prior to accepting an offer of admission.
Utilize a monthly payment plan option. HBA offers the option of breaking the remaining tuition balance (after any financial aid is applied) down into smaller payments. At HBA, families have the option of paying the tuition balance in 10 monthly installments through FACTS Tuition Management.
Take advantage of tax free gifts. Grandparents and other relatives can take advantage of the annual gift exclusion, which in 2018 will allow a one-time gift of up to $15,000. This gift is not subject to gift tax when it is used for tuition expenses, according to the Internal Revenue Service.
Start a Coverdell Education Savings Account. This is a trust or custodial account used to pay for educational expenses for beneficiaries under the age of 18. According to the Internal Revenue Service, parents or relatives can place up to $2000 per year per beneficiary into the account so the beneficiary can receive tax-free distributions to pay for qualified educational expenses.
Use a 401K Loan. If you plan to stay with your current employer and are participating in a 401K program which allows it, a 401K loan may be a viable option. Essentially, this is borrowing from your retirement interest free, though there are rules regarding maximum loan amounts and repayment periods. The Internal Revenue Service addresses the guidelines here. You can also visit the FAQ section of the IRS website regarding these types of loans.
To find out how to fully maximize your tax benefits for education, go the the Internal Revenue Service's Information Center. To read more about how to help you finance private school education, visit the Private School Review website or Honolulu Magazine's Private School Guide for other creative ideas.