What's Driving the Growing Costs for Memphis Private Schools

What you need to know about Memphis private schools and their growing costs

Finding the right school for your child and family is a daunting task, and while there are many options in Memphis, for many families cost is a huge factor in this decision. Tuition varies greatly among private, parochial, and independent schools, and when searching for the just right school, the child’s needs and the family’s needs are both of equal importance. Many of a family's criteria includes practical issues like schedule, location, and of course tuition.

Comparing private school tuition from one school to another is like comparing apples and oranges. There are similarities and a lot of differences because each school is unique. The schools have different expenses and sources of revenue which determine the tuition costs.

There are a lot of forces driving the growing costs for Memphis private schools, however, let’s examine the private school categories because it is important to understand the differences.

Overview of 5 Different Types of Private Schools

A private school refers to any learning institution that does not receive public funding from its state government. 

1. Traditional Private School – A traditional private school is not funded by the government which means that administrators and teachers have more control over the curriculum.
   
2. Independent School – A private school that is overseen by a board of governors or trustees.
   
3. Private Special Education School – This is a private school option specifically for students with special needs such as students with ADHD, autism, severe anxiety, or a learning disability. These schools are designed to make accommodations for students with special needs and the teachers and administrators have additional training.
   
4. Religious School – A religious school is a private school that is affiliated with a particular religion They are usually classified as independent private schools with a religious affiliation.
   
5. Parochial School – This type of private school is a religious private school that is funded by a local church – the term “parochial” means that the school acts as a partner with a local church. 

According to Private School Review, for the 2022 school year, there are 109 private schools serving 25,820 students in Shelby County, TN. 14% of all K-12 students in Shelby County, TN are educated in private schools. The TN state average is 9% and the national average is 25% for students educated in private schools.

Tennessee private schools in 2022 are composed of 20% minority students.

In the United States, 78% of private school students attend a religious private school, while 22% of private school students attend non-religious private schools.

The average cost of private school tuition has grown at a rate that is twice the general inflation rate over the past 20 years, increasing by between 4% and 8% each year. There are several cost factors that have led to the rise in private school tuition. 

Factors for Potential Reasons for Increasing Private School Tuition  

• Looking at history and planning budgets based on inflation trends
• Attracting families by hiring top faculty
• Offering state-of-the-art facilities and programs
• Offering generous financial aid to attract a diverse student body that has led to a rise in private school tuition. 

The rise in the volume of many of the private school employees who have a larger compensation package than a typical teacher, as well as administrative employee compensation increases have been the strongest contributors to the upward trends in private school tuition costs. On the contrary, some schools have been proactive in their budgeting by considering the financial burdens of the pandemic on families which has probably slowed the increased tuition percentages slightly over the last couple of years.

Simply explained, a school’s tuition is the amount of money that they charge for educating a child. Tuition is income on the school’s balanced budget and the dollar amount in which a school must charge per student to offset all of the various expenses of running a school. The amount is determined by adding up all school expenses and then from that total, subtracting any income from investments, endowments, and gifts. That net expense is what the tuition charges offset. The number of students a school has as well as the type of school, the location (real estate costs), insurance (liability and property), and facilities are major factors in the cost. The school facilities vary widely as well. A school located in the 10-year-old education wing of a place of worship will cost less to run than a similar school housed in a 1930s mansion set on 30 private acres. Endowments are a major factor in determining both the full tuition to be charged as well as the amount of money that can be allocated to the financial assistance pool. Older, well-established schools usually have substantial endowments. These funds have been built up over the years with gifts and bequests from former students and families as well as generations of trustees.

Tuition covers about 77% of some schools’ operating costs, with the balance being met by gifts from individuals, businesses, foundations, and endowments.

For example, during the past five years, Memphis University School has received nearly $12 million in gifts for the operation of the school. MUS has a $51 million endowment fund that generates income used for scholarships, teacher salaries, and the general operations of the school.

St. Agnes Academy and St. Dominic School use a Variable Tuition model, where they offer a tuition rate that matches a variety of financial situations. 

 In the United States, $12,476 is the average annual tuition among the nation’s 22,440 private K-12 schools. Annual tuition at an average private high school is $16,040.

Among the nation’s 5,158 Catholic elementary schools, the average tuition is $4,840.

$10,403 is the average tuition for all K-12 private schools in Tennessee.
The national average tuition cost is higher than the TN average tuition.

As schools prepare, forecast, and balance their budget each year, they do take into account economical issues such as inflation. In July of 2022, inflation hit 8.5%, setting a record high since the early 1980s. Inflation has become a major issue around the world and in Memphis, these rising costs have affected nearly everyone. Memphis doesn’t have a massive public transportation system. Most Memphians use cars to get to work and school. As a result, when gas prices go up, unlike in some cities, Memphians feel it in their everyday commute.

Additionally, Memphis is one of the biggest shipping hubs in the world. The economy depends in part on the success of companies like FedEx. However, inflation usually impacts them the hardest. Not only does it cost more all of a sudden to ship things, but families are now cutting back on their spending and ordering less. This translates to layoffs, shortened hours, and less money coming into the city’s economy.

Inflation has also impacted energy costs. Inflation increases operating costs in the private sector and at every level of government – including employee wages, borrowing costs, and long-term pension liabilities. The recent jump in inflation likely stems from a combination of overlapping factors – including increased consumer demand, supply chain issues, higher wages, and federal policy.

Similar to the challenges Memphis and the nation have faced with inflation, many private schools' costs of basic goods and services have risen dramatically. Energy costs alone consume a major part of any school's budget. Faculty and staff salaries and benefits are a substantial part of budgets as well. In order to attract and retain qualified, skilled and experienced personnel, the need to offer a decent compensation package increases. Most schools also offer free or substantially reduced tuition for children of faculty and staff.

Tuition may be the biggest cost associated with a private school, but it is not the only one for families. Technology, books and supplies, field trips, uniforms, athletics, and requested donations can add to the overall bill. These extra expenses can raise the total average nationwide cost by almost 30%, according to educationaldata.org.

It is important to recognize that oftentimes parents don't financially or mentally plan to send their children to private school, so when they do, it can be a sudden major expense with little notice.

Surveyed throughout the years, M.O.S.T. parents indicate that the Top 3 Reasons are:

• They feel their designated public school is unsafe
• Their designated neighborhood school is underperforming
• The family is looking for religion in their child's education

These reasons for choosing private schools do not always allow for enough time for savings or investments to help support a family's ability to pay tuition.  

There are many details that schools must consider when calculating tuition, and whether families are planning for a private school in their budget years in advance or not, parents must take these details into consideration when they are choosing a private school. As schools and families prepare for the future, it can be valuable to recognize and consider the variables discussed. While schools spend this time protecting and preparing the school's success and stability for the future, it only makes sense for families to be prepared as well, and most likely count on this slow and steady increase in tuition for years to come.