CHECKED 2026-10-07 · 2026-2027

How to Pay for Private School: Aid, Savings and Payment Plans

State scholarship and education savings account programs are covered in our guides for Texas, Florida, Georgia and Tennessee, and North Carolina and Ohio. A state award may cover some or all eligible tuition, but it may leave fees or other costs unpaid. Some families also face a closed application window or a waitlist.

This guide covers everything else: school financial aid, private and tax credit scholarships, 529 and Coverdell accounts, tax rules, payment plans, and help from grandparents. The useful combination depends on your confirmed awards, the school’s rules and your budget.

School financial aid

School-funded need-based aid can reduce tuition. There is no universal income cutoff across schools: household size, assets, expenses, other children’s education costs and the school’s aid budget can matter. Ask about aid even if you are unsure whether your family qualifies.

How it works. A school may use a third-party service to collect financial information for its aid review. Examples include FACTS Grant & Aid, Clarity, and SSS/Ravenna Financial Aid. These are separate services; use the one your school specifies. The application may request tax returns, W-2s, assets, debts and other children’s education costs. Follow the school’s current document requirements. The platform and school’s process vary. Clarity, for example, says it collects and organizes financial information while each school calculates the family contribution and decides the award. Clarity’s explanation

Deadlines. Get the school’s financial-aid deadline separately from its admission deadline. Ask whether late applications are considered and whether aid remains available. Do not assume admission includes an aid offer.

What to ask. Ask what percentage of families receive aid, the average award, and whether the school meets full demonstrated need. Ask how the school treats state scholarship funds. Some apply state dollars first and then calculate aid on the remaining balance; others reduce aid when state funds arrive.

Other school discounts. Many schools also offer sibling discounts, discounts for children of faculty or clergy, parishioner rates at Catholic schools, and merit scholarships for academics, arts, or athletics. Availability and renewal requirements vary by school.

Private and tax credit scholarships

Outside the school, scholarship money comes from three main places.

Scholarship granting organizations in your state. Florida, Georgia, Ohio, and other states have long-running tax credit scholarship programs. Businesses or individuals donate to nonprofit scholarship organizations and receive a state tax credit, and the organizations award scholarships to students. State tax-credit scholarship rules vary. Ask the school and the relevant organization about its current process; a donor credit is separate from a student’s award.

The new federal tax credit scholarship (starting January 2027). The 2025 federal tax law created the first national tax credit scholarship program. Beginning January 1, 2027, eligible taxpayers can claim a nonrefundable federal credit of up to $1,700 for qualifying cash contributions to eligible scholarship granting organizations (SGOs). The October 1, 2026 proposed regulations describe up to $3,400 for married taxpayers filing jointly. A donor credit is not a scholarship amount promised to a child, and the credit does not cap how much someone may donate. IRS proposed-regulation announcement

For families seeking scholarships, the key question is whether your state opted in. Students can only receive these scholarships in participating states. All six states this site covers in depth (Texas, Florida, Georgia, Tennessee, North Carolina, and Ohio) are on the IRS list of states participating for 2027. Student eligibility is tied to household income relative to the median income in your area (up to 300% of area median gross income), but meeting an income test does not guarantee a scholarship. Participating states and eligible SGOs must complete the program’s requirements. Check the IRS participating-state page and the relevant SGO for a verified application process rather than assuming a launch date for family applications.

Local and denominational scholarships. Dioceses, churches, civic organizations, and community foundations frequently fund scholarships for specific schools or communities. Ask the school's admissions or business office for a list. Ask about award sizes, eligibility, renewal and application deadlines rather than assuming an award will be available.

529 plans for private school

Yes, you can use a 529 plan for private school, and the rules became considerably more generous in 2026.

The $20,000 annual limit. Since 2018, families have been able to withdraw up to $10,000 per year per student from a 529 plan tax-free for K–12 tuition. For 2026, the federal limit is $20,000 per beneficiary per calendar year across all of that beneficiary’s 529 plans, not $20,000 per account. This is a withdrawal limit, not a scholarship or a deduction for the tuition bill. IRS Topic 313

Expanded qualified expenses. The same law broadened what counts as a qualified K–12 expense beyond tuition. Withdrawals can now cover curriculum and instructional materials (print and online), tuition for eligible tutoring or educational classes outside the home, standardized test fees, dual enrollment fees at a college, and educational therapies for students with disabilities. Expense and provider conditions apply. Check the current qualified-expense rules and retain receipts; not every school-related purchase qualifies.

How to use it well. The tax benefit comes from investment growth, so 529s work best when money has time to grow. Even short holding periods can help in states that give a state income tax deduction for contributions, although a deduction is not a dollar-for-dollar credit or an investment return. Before any short-term contribution-and-withdrawal strategy, check the state’s qualifying-expense, timing and recapture rules with a tax adviser.

Check your state's rules. States set their own tax treatment, and not every state follows the federal changes. A federally qualified withdrawal may still trigger state tax or recapture of a previous contribution benefit. Check the tax rules applicable to your residence, any previous state deductions, and the specific plan. Do not infer state treatment from the federal $20,000 limit.

Watch the college fund. Every dollar spent on K–12 is a dollar not growing toward college. If your 529 is also your college plan, model both before you start drawing it down.

Coverdell education savings accounts

A Coverdell education savings account is an older, smaller alternative to a 529. Contributions are limited to $2,000 per year per child, and eligibility to contribute phases out at higher incomes. In exchange, Coverdells allow a broad range of K–12 expenses and can be invested in almost anything a brokerage offers. Remaining funds generally must be distributed within 30 days after the beneficiary turns 30, with an exception for special-needs beneficiaries and rules for eligible family transfers. Compare contribution limits, eligible expenses, investment choices and state treatment before choosing an account. IRS Coverdell guidance

Note that a Coverdell is not the same as a state "education savings account" program such as Florida's or Texas's. Those are state-funded accounts; a Coverdell is a personal savings account.

Is private school tuition tax deductible?

Ordinary K–12 tuition is generally not a federal income-tax deduction. Paying tuition to a nonprofit school does not make it a charitable donation. Specific medical-expense rules and other benefits may apply:

Special education. Tuition at a school whose primary purpose is serving students with disabilities may qualify as a deductible medical expense when a physician recommends it. The principal reason for attending and the services provided matter. A diagnosis alone does not make all tuition deductible. An eligible medical deduction also depends on itemizing and the applicable adjusted-gross-income threshold. IRS medical-expense rules
Pre-K and before or after care. Qualifying preschool and before- or after-school care can count as care expenses when the dependent, work-related and other requirements are met. Tuition for kindergarten and higher grades is not a care expense. IRS care-expense rules
529 tax benefits. Qualified 529 distributions can provide federal tax benefits through tax-free earnings. Some states separately offer contribution benefits under their own rules.
State credits and deductions. Check credits separately from deductions. For example, Ohio has a targeted nonrefundable credit for qualifying nonchartered, nonpublic-school tuition; it is not a universal private-school tuition deduction. Confirm the current tax-year rules and school eligibility. Ohio law

Tuition payment plans

Payment plans do not reduce what you pay, but they make large bills manageable. A school may offer annual, semester or monthly billing. Request its actual schedule and any discount for paying early.

A school may run its payment plan through a tuition-management company such as FACTS. Check enrollment fees, finance charges, card charges and late-payment penalties. Ask whether the plan is automatically debited and when the first payment is due. Ask whether any installments are due before the school year begins.

If your state program pays in quarterly installments, ask the school how it aligns those deposits with your payment plan so you are not paying twice and waiting for reimbursement.

Private school loans

Some lenders and tuition management companies offer K–12 tuition loans. Use these with caution. Unlike federal college loans, K–12 loans carry market interest rates and no income-driven repayment options. Borrowing for 13 years of tuition can create a debt load that competes with saving for college and retirement. Do not borrow against an unconfirmed scholarship as though payment were guaranteed. Compare the full repayment cost and the consequences if an award is delayed or denied; seek advice for your circumstances.

Help from grandparents and family

Grandparents can pay tuition directly to a private school without it counting toward their annual gift tax exclusion. Federal gift tax law excludes qualifying tuition paid directly to an eligible educational organization, with no dollar limit. The payment must go straight to the school; giving the money to the parents first does not qualify.

The tuition exclusion does not cover books, fees, supplies, room or board. It is a gift-tax rule, not an income-tax deduction. Other gifts, including 529 contributions, have separate rules. IRS gift-tax instructions

A grandparent-owned 529 is another possible source of support. Before using or changing account ownership, consider investment control, tax treatment and the aid rules of the schools your child may attend. Federal and institutional aid assessments are not identical.

Building your funding plan

A practical sequence:

Check your state program’s current window, priority rules and required documents. Submit a complete application on time; an earlier submission does not improve lottery odds in programs that use a lottery.
Apply for school financial aid by the school's deadline, even if you are unsure you qualify.
Ask the school about local, parish, and denominational scholarships.
Check verified SGO announcements for the 2027 federal scholarship program. Do not include an unawarded scholarship in your committed budget.
Decide how much of your 529, if any, to use for K–12, and confirm your state's tax treatment.
Ask grandparents who want to help to pay the school directly.
Enroll in a monthly payment plan for the remaining balance.

Avoid counting the same expense twice

Keep an annual record of the tuition and other eligible costs, what each scholarship pays, and what you pay from savings. A school may reduce its own aid when outside funding arrives. Tax-free education benefits also have coordination rules: do not assume the same expense can support multiple tax-free distributions or credits. Ask the program, plan administrator or tax adviser how the rules apply before withdrawing money. IRS education-benefit coordination

Official sources and updates

Checked October 7, 2026. Confirm tax rules and school-specific terms before making a financial commitment.

This guide provides general educational information. It does not determine admission, scholarship eligibility, an award, or an individual tax result.