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Decisions Decisions

Jan 02, 2015 10:01AM ● By Cate Reynolds
Options for financing your child’s education.

By Jonathan Yates

It is only natural for a parent to want what is best for their child.

That is especially so when it comes to education. In the Annapolis area, there is a vast array of opportunities for maximizing a child’s development through both public and private schools. For the parent seeking to fully develop the potential of their child, a private school career that ascends through the levels of high education has been proven to result in the most opportunities and the highest return on the dollar.

The case of the world’s richest man who founded Microsoft, Bill Gates, stands as a telling example for all as to how private schools bring out the best in a child in ways that public education simply cannot.

Bill Gates was raised in the Seattle, Washington areas in an upper middle class family that was a strong believer in public education. But it became obvious in elementary school that he was not developing fully. While his grades were good, something was lacking in the overall persona that is so important for a child to reach full potential as an adult. His parents enrolled him in Lake Side Preparatory School, a private institution in Seattle.

Soon Gates blossomed as an all around student.

Most of important of all not only for his development but for the furthering of the global economy, he was able to fully embrace his love of computers. The Mother’s Club at the Lakeside School bought a teletype terminal for the students with the proceeds from a rummage sale. Computer time was donated by a local company. Gates soon spent much of his free time on the computer, establishing a bond and business partnership with Paul Allen, another student at Lakeside.

At Lakeside, Gates and Allen developed a computer program that monitored traffic patterns, “Traf-o-Data.” That was sold to the City of Seattle for $20,000.00. After both went to college at Harvard, they created Microsoft, which made Bill Gates the richest man in the world.

Paul Allen just bought the Los Angeles Clipper for $2 billion, the most ever for an NBA team but pocket change for an individual worth about 8 times that amount.

There is no inherent magic in a private school education. But there is an irresistible force that comes from the power of the free market. If private schools did not perform, tuition dollars would dry up very quickly. But just the opposite has happened. From pre-school through graduate school after college, private schools have become much more appealing to the American family.

So are the financing options to pay for a private school education.

Private schools at all levels offer financial aid. Last year, The Severn School awarded more than $2.4 million in tuition assistance. At The Johns Hopkins University, 44 percent of undergraduates receive some form of financial assistance. Princeton University and others utilize a “need blind” policy where the payment potential of the student does not come into consideration.

Families also have the 529 College Savings Plan and the Coverdell Education Savings Account to finance private school expenses.

The 529 College Savings Plan and a Coverdell Education Savings Account both offer earnings growth that is deferred from taxes. The asset mix is selected by the investor. There are no Federal taxes when the funds are used for qualified educational expenses.

T Rowe Price, headquartered in Baltimore, manages and underwrites the 529 College Savings Plan for Maryland residents. The College Savings Plans of Maryland offers 14 different investment options in the two plans for saving for higher education. These are also the only 529 plans that a Maryland resident can use as a Maryland state income tax deduction. The maximum annual deduction from Maryland state taxes is $2,500.00, but it can be carried over into the future.

Unlike section 529 college savings plans and prepaid tuition plans, which are restricted to postsecondary education, Coverdell Education Savings Accounts may be used to save for private K-12 schools in addition to college. The contribution limit is $2,000.00 annually for each child in the Coverdell Education Savings Account.

Students can also play a major role in not only financing their education but furthering their career prospects and potential.

Carolyn Shanks is a junior pre-med student at Vanderbilt University, one of the top 100 in the world, according to the most recent rankings of The London Times. As an undergraduate, she has both earned money and credits for assisting in research projects normally associated with post graduate students. These include the prestigious Jesse Stoke Research Award last summer, and now stem cell research in curing and preventing diabetes through reprogramming cells in mice at the laboratories at Vanderbilt with doctoral students.

What advice does Shanks offer to others about how to obtain these research opportunities that are rewarding in every meaning of the word?

“Email your professors and don’t stop until you find one that needs research assistants,” she states candidly at an interview in the Starbucks at the West End of the scenic Vanderbilt campus. “Professors at Vanderbilt are all very accessible and are pleased to hear from their students,” Shanks relates from her own personal experience. Both of her parents are medical doctors and her sister is in medical school, so Shanks is well aware of what it takes and what works in moving her closer to her educational and career goals of a joint MD/Ph.D. in Neuroscience.

That is one of the intangibles of a private school that is a competitive advantage for the student.

There is greater access to all of the resources of the school: the faculty, the staff, and the alumni network, among many others. The last is one of the most important of all for a family considering private schools. Certain institutions have established relations with entities that greatly facilitate success in all endeavors.

These come into play for both education and career.

The Johns Hopkins University has a number of joint programs with its graduate schools that can save its undergraduates both time and money. The joint BA/MA program with the Nitze School of Advanced International Studies (SAIS) offers a graduate degree a year sooner, at significantly less cost, for those undergraduates at Johns Hopkins who complete the program. There is a similar combined program with the Bloomberg School of Public Health at Johns Hopkins.

It is not just in academics either: private schools in Maryland produce among the best players in the country.

DeMatha is a legendary powerhouse in basketball. Rudy Gay, an NBA all-star, graduated from Archbishop Spalding. The starting first baseman for the New York Yankees with an annual salary of over $20 million is Mark Teixeira, a graduate of Mt. St Joseph High School, who was born in Annapolis. Any college that hopes to contend for the national championship in lacrosse recruits heavily from such local powers as Severn, St Mary’s, Gilman, Boy Latin, and others in the 30 miles that separate Baltimore from Annapolis.

So what is a parent to do to derive the most from what private schools have to offer in the greater Annapolis area?

Start early and go deep is the most important. Begin saving early; and explore all that the private schools offer. Many have camps and programs open to non-students. The financial aid offices can give advice that will result in outsized returns, in every many of the word. Explore the websites and catalogues so that all that is offered becomes known and part of the preparations for grade school, high school, college, and beyond.

Chances are that your child will not become the next Bill Gates or Rudy Gay, but this should result in creating the conditions to fulfill their potential as an adult!

Jonathan Yates went to grade school, high school, college, law school, and graduate school within 50 miles of Annapolis.