Private School vs. a Better School District With Mortgage Rates Still Above 7%: $307,600 in Tuition vs. an $87,000 Carrying Cost
Picture a family with one kid starting kindergarten. They've found a private school at $18,500 a year. They've also found a house in a stronger public district that costs about $90,000 more than the house they'd otherwise buy. The mortgage rate on the screen says "still above 7%." Which one costs less?
The answer flips depending on a handful of numbers, and several of those numbers moved this week. This post runs both options side by side with an example family, then shows which inputs you should replace with your own.
What the latest numbers say
Three data points frame this decision right now.
- Mortgage rates: NerdWallet's "Mortgage Rates Today, Monday, September 28" reports that rates fell a little today but remain solidly above 7%. That makes the district-premium option more expensive than it looked when rates were near 6%.
- Inflation: The Bureau of Labor Statistics' "Major Economic Indicators" page lists CPI at +0.4% in August 2026. Tuition increases tend to track costs schools face, so this is a reason to be careful with the tuition growth assumption.
- Your paycheck: The same BLS page shows average hourly earnings up just $0.10 in August, unemployment at 4.1%, and payrolls up 162,000 (preliminary). A dime an hour is roughly $208 a year for a full-time worker (2,080 hours). Tuition bills grow faster than that.
If one month of 0.4% inflation repeated for a year, it would annualize to roughly 4.9%. That's an illustration, not a forecast. It does show how a small monthly number turns into a large annual one, and why a 13-year tuition model needs a growth rate you choose deliberately.
Option A: Private school tuition over 13 years
This is a worked example, not a quote from any school. Your numbers will differ.
- Year-one tuition: $18,500
- Annual increase: 4%
- Horizon: 13 years (K through 12)
The sum of a 13-year stream growing at 4% is 18,500 × (1.04¹³ − 1) ÷ 0.04, which comes to about $307,600. That averages about $23,700 a year, roughly 28% above the sticker price, because tuition keeps climbing.
Here is how sensitive that is to the growth rate:
| Annual tuition increase | 13-year tuition total |
|---|---|
| 3% | about $288,900 |
| 4% | about $307,600 |
| 5% | about $327,700 |
One percentage point of growth moves the total by roughly $19,000 to $20,000. Ask the school for its actual increases over the past five years, not the current year's number.
Tuition is also not the full bill. Uniforms, fees, transportation, and fundraising asks all sit on top. For a deeper breakdown, see Private School's True 13-Year Cost Has 5 Hidden Layers Beyond Tuition.
Option B: Paying a house premium for the better public district
The house premium is a different kind of cost. You don't hand it over each year, and part of it comes back when you sell. That makes it easy to compare badly.
Example assumptions (mine, labeled as such):
- Premium over a comparable house in a weaker district: $90,000
- Down payment: 20% of the premium, or $18,000
- Extra loan: $72,000 at an assumed 7.1% for 30 years (a stand-in for "still above 7%")
- Extra property tax: about 1.2% of the premium, or roughly $1,080 a year, rising over time
- You stay 13 years, and your money would otherwise earn 4%
The math:
- Extra monthly payment on the $72,000: about $484, or about $5,800 a year
- Total extra payments over 13 years: about $75,500
- Principal paid down in that time: about $14,800, so extra interest is about $60,700
- Extra property tax over 13 years: roughly $14,000
- Opportunity cost on the $18,000 down payment at 4%: about $12,000
Carrying cost total: about $86,700. That assumes the $90,000 premium is still there when you sell. If the premium shrinks, you lose that too. In the worst case, where it disappears entirely, the total approaches $177,000.
So the range for the district route in this example is roughly $87,000 to $177,000, against $307,600 for tuition. The gap is real, but the range on the district side is wide, and that width is a risk you should weigh.
Side by side: one child
| Private school | Better district | |
|---|---|---|
| 13-year cost (example) | about $307,600 | about $87,000 if premium holds, up to about $177,000 if it vanishes |
| Cash flow | Paid every year, growing | About $5,800 a year extra, plus taxes |
| Exit flexibility | Can stop any year | Selling costs and rate lock-in |
| Rate sensitivity | Low | High |
| Key risk | Tuition growth | Premium erosion and rates |
That last row matters this week. At the rates NerdWallet reports, the district route is more expensive than it was six months ago. A one-point drop in your mortgage rate would cut that $60,700 interest figure by a large margin, so refinancing options are part of the calculation. Our earlier comparisons show how this played out at different rate levels. See Private School vs. a Better School District With Mortgage Rates Above 7% for a similar setup.
This is the kind of analysis Zuvelanti runs for you, so you don't have to build the spreadsheet yourself.
Two kids changes the answer
Here is where the two options split apart.
Tuition scales with the number of children. Two kids at the same school, even staggered a few years apart, means roughly 2 × $307,600 = $615,200 before any sibling discount. The house premium barely changes. You buy one house and both kids attend the same public schools.
| One child | Two children | |
|---|---|---|
| Private school (example) | about $307,600 | about $615,200 (less any sibling discount) |
| Better district (premium holds) | about $87,000 | about $87,000 |
| Gap | about $220,600 | about $528,200 |
With two kids, the district route wins by more, unless the premium collapses or you were going to move anyway. If you would buy a house in either district at the same price and rates, the premium isn't a real added cost and the comparison changes completely. Our post on two kids and the school district premium at 6.7% rates walks through that scaling.
The variables that can flip the result
Everything above is an example. These inputs decide your answer.
1. ESA or voucher eligibility. Some states offer education savings accounts or vouchers. As a hypothetical, a $7,000 annual benefit over 13 years is $91,000, which would cut the example tuition total to roughly $216,600. Amounts, income limits, and eligibility vary by state and change often, so check your state's current rules. If you qualify, private school gets much cheaper. If you don't, ignore this line.
2. Whether you'd move anyway. If you're already planning to buy, the premium is a marginal cost. If you own a house with a low-rate mortgage, moving means giving that up, which can dwarf the premium.
3. How long you'd stay. The district route depends on holding the house long enough to spread transaction costs. If a job change might force a move in year four, the math tilts.
4. Your actual mortgage rate and down payment. A 7.1% assumption is only a placeholder. Every quarter point changes the carrying cost.
5. Tuition growth and sibling discounts. Get the school's real history in writing.
6. College admission effects. This is the hardest to quantify, and the one where people fool themselves. Ask what specific outcome you're paying for. If the extra $220,000 in the one-child example is supposed to buy better college odds, set a break-even: how much better would the outcome need to be, in dollars, to justify the difference? Then check whether the school's actual results support that, and whether the same student would likely get similar results in a strong public district.
7. Your income stability. With unemployment at 4.1% and wages growing by a dime an hour, a tuition commitment that is 13 years of fixed, escalating payments deserves a stress test. Could you cover it through a job loss? A house payment can be refinanced or the house sold, while tuition contracts depend on the school's terms.
Don't fund tuition from money that swings
Mr. Money Mustache's "Will the AI Bubble Destroy our Retirement?" makes the point that markets keep surprising people in both directions. That matters here for a specific reason: if part of your plan is paying tuition out of a portfolio at or near record highs, a 30% drop in year three lands right when you need to withdraw. You'd be selling low to pay a bill that doesn't shrink.
Two questions to ask:
- Is tuition coming from current income, from savings you've already set aside, or from investments you expect to keep growing?
- If the market dropped hard next year, would you still choose this school?
If the second answer is "no," the plan depends on the market cooperating, and that belongs in the cost model as a risk.
A small lever: bank bonuses
NerdWallet's "Should I Switch to a New Bank Just to Earn a Bonus?" notes that these bonuses usually take real effort to earn. It's worth being honest about scale. Across 13 years, the example tuition averages about $23,700 a year. A one-time account bonus is a rounding error against that. It might cover a month of uniforms and supplies. It won't move the decision, so don't let it.
A quick decision path
- Check ESA or voucher eligibility. If you qualify for meaningful money, redo the private school total first.
- Decide whether the house premium is truly incremental. If you'd buy either way, subtract nothing. If you'd otherwise stay put, add moving costs and the loss of any low-rate mortgage.
- Compute both totals with your real inputs, using a range for tuition growth (3% to 5%) and for premium retention.
- Multiply tuition by your number of kids. Leave the house premium alone.
- Stress test: income drop, market drop, rate change.
- Put a dollar value on what you believe the private school delivers and compare it to the gap.
If the gap is large and the outcomes are similar, the math points toward the district or the local public school. If the gap is small, or ESA money closes it, or the private school fits a child's needs in a way the public option doesn't, tuition can be the right call. Either result is a valid answer. The point is to reach it with numbers rather than with dread.
For a more structured version of these steps, see How to Calculate Private School's True 13-Year Cost: A 6-Variable Formula.
Why this week is a good time to run it
Rates are above 7% but moving, inflation printed +0.4% for the month, and wage growth is thin. Each of those shifts one side of the comparison, and they shift it differently for a family with one child and a family with two. The example here came out favoring the district route by a wide margin, but it took a handful of assumptions to get there, and yours will differ.
If you want to see your own result, Zuvelanti lets you enter your tuition quote, local house premium, mortgage rate, ESA eligibility, and number of kids, and compares the 13-year totals side by side. Try it before you sign an enrollment contract or a purchase agreement, because both are hard to undo.
Sources
- Will the AI Bubble Destroy our Retirement? — Mr. Money Mustache
- Mortgage Rates Today, Monday, September 28: A Little Lower, But Still Above 7% — NerdWallet
- Should I Switch to a New Bank Just to Earn a Bonus? — NerdWallet
- Major Economic Indicators Latest Numbers — Bureau of Labor Statistics
- This Tahoe Hotel Got a Glow-Up, but Missed a Few Spots — NerdWallet