Private Schools Ailing Along With Economy

Cynthia Hogan pulled her daughter and son out of Catholic school when she started feeling the squeeze of a recession that had just begun.

"We just couldn't keep writing the check. It was killing us," said Hogan, who lives in San Francisco. "My husband just got laid off in October. Thank God we are where we are."

Across the country, Lisa LeMieux had moved her 9-year-old daughter to a private school in their rural, central Florida community last year, taking on the $400 monthly tuition to provide her with a better education. It lasted half a year.

The mother of two from Oviedo, Fla., decided to switch Danielle back to public school in the fall after the tuition, rising health care costs and other expenses put too much stress on the family's budget.

"This year, it would have been really difficult," said LeMieux, whose husband owns a small contracting business.

This recession, the worst in a generation, is forcing painful decisions about private school. Parents are falling behind on tuition payments, and some are switching kids to public school now, in the middle of the school year, something they almost never do.

"It's unfortunate that we've reduced choice, particularly for middle and lower income families," Arthur Levine, president of the Woodrow Wilson National Fellowship Foundation, told CBS Radio News. "In the past, they used to be able to attend private schools because there was scholarship aid and because they had more revenue."

Karen Lockard, principal at Maryland's Bethesda-Chevy Chase High School, said several students left elite prep schools to transfer there this year.

"Traditionally, that's not when parents move them - that's much more disruptive, to move them as 11th- or 12th-graders," Lockard said. "It's tough, because friendships are formed, and when you're in private school, some of the requirements for graduation are not the same as public school. They come to school and have to make up credits that don't transfer."

About 7 percent of the families who pay tuition through New York-based Smart Tuition are dropping out midyear, double the usual number.

"It's harder to collect tuition now than ever," said chief executive Andrew Goldberger, whose company handles billing for about 2,000 private and religious schools.

More of the parents sticking with private schools are asking for financial aid, straining school endowments that withered with the stock market. The National Association of Independent Schools said 2,400 independent and parochial schools it worked with reported a 4.3 percent jump in the number of families applying for aid.

"Consumers are feeling much more pain," said Nigel Gault, chief U.S. economist at IHS Global Insight.

"You're paying for private school, but you still have college costs stretching out beyond that," he said.

College costs are no small matter, considering they are rising faster than the cost of health care, according to a recent study from the National Center for Public Policy and Higher Education.

That was a factor for Lisa Henderson, who moved her daughters from private school to Chevy Chase Elementary in the Maryland suburbs of Washington.

"We have to start saving for college," she said "Prices went up every year. It was going to be too hard. Plus, we had a great public school option."

An estimated 6 million students attend the nation's 30,000 private schools, about 11 percent of all elementary and secondary students in the U.S. The schools range from elite academies and boarding schools that cost $30,000 a year or more to low-income parochial schools, where parents pickup a fraction of the actual cost with the rest coming from donations.

It's tough to know exactly how many have withdrawn from private school, or how many will drop out next year.

The Education Department said private enrollment dropped by 120,000 students in the current school year. That preliminary forecast does not take the economy into account, the agency said.

That trend has been fairly consistent: For at least 40 years, private school enrollment has dropped following recessions. Private schools lost nearly half a million students after recessions in the early 1980s. Even after the relatively brief 1990-1991 recession, private schools lost 33,000 students. They lost more than 200,000 students after the recession triggered by the Sept. 11 attacks.

Contrary to the Education Department's assessment, the National Association of Independent Schools said overall enrollment at the nation's independent private schools has held steady.

It's likely, though, that the full effect of the faltering economy has yet to hit - steep reductions may come this spring when parents who paid tuition for the current school year before the meltdown decide whether to re-enroll their children.

The hardest-hit may be Catholic schools, which educate 40 percent of private school students. Catholic enrollment has been dropping for decades, and hundreds of schools have closed, as Catholics moved to the suburbs, the church lost massive sex-abuse settlements and numbers of priests, nuns and brothers tumbled.

"There are more Catholic schools at risk," Levine told CBS Radio News. "Schools that depend upon low-income and middle income families primarily are at risk."

Private schools aren't the only ones hurting. Public schools, already cutting teachers and increasing class size, could feel more strain as private-school students make the switch, said Dan Domenech, executive director of the American Association of School Administrators.

As the economy boomed over the last 15 years, private school enrollment and fees grew, too, faster than the rate of inflation. Annual private school tuition more than doubled from an average of $3,116 in 1993-1994 to $6,600 in 2003-2004, the most recent figure available from the U.S. Department of Education. That increase almost quadruples the 31 percent rise in the Consumer Price Index, which tracks the nation's inflation, during the same period.

Parents demanding more services helped drive up their own tuition costs. The price of attracting the best teachers also rose, as well as the cost of upgrading facilities and paying energy bills.

"The question is, who can afford this?" said Levine. "And it's a diminishing number of Americans who are going to be able to."

Some families are embarrassed to seek help. Kathryn Gibson, head of The MacDuffie School in Springfield, Mass., where tuition runs about $15,000, suspects that is why enrollment dropped this year by 28 students from last year's total of 235.

"Some moved out of the area, so that was clear, but others just said it wasn't a good fit or that their children were now going to a public school," Gibson said.

At the Pine Crest School, a 2,580-student academy with campuses in Fort Lauderdale and Boca Raton, Fla., tuition ranges from $17,985 for prekindergarten to $21,990 for high school. Enrollment is steady, but 20 percent more students are getting financial aid this year. The payout jumped to $3.2 million, up 23 percent from $2.6 million last year.

"I can't tell you what it's like to have a parent here, talking about his child, particularly when it's a child who is bright, who is succeeding at our schools and the family has to come and say, 'I can't keep my child here unless you help me,"' said Elena del Alamo, the school's vice president for admissions and financial aid.