LDN - Business

YOUR MONEY - Do the math before you pick the expensive school zone

[June 11, 2019] By Chris Taylor

NEW YORK (Reuters) - For John Bohnsack, it was a classic parental dilemma: Get a small, expensive house in a high-quality school district, or pay less and get more house in a worse neighborhood.

The financial planner, 34, and his wife opted for the better school district in College Station, Texas, a university town that is home to Texas A&M. His two girls, 5 and 8, are thriving.

"It comes down to your values: Is it worth it?" said Bohnsack, who estimates their monthly payment is about 10% higher than it would be for comparable homes in lower-performing school districts nearby.

The choice is not an easy one, but it is common across the United States. A whopping 58% of parents admit they are paying more for rent or their mortgage to be in a good school district, according to the latest “Parents, Kids & Money” survey by Baltimore money managers T. Rowe Price.

“People recognize that there is a trade-off involved,” said Stuart Ritter, senior financial planner with T. Rowe Price. “School zone is important, but at the same time, it has to be integrated with other financial goals too.”

Getting into a good school zone affected 42% of families' finances to a “considerable” degree, the T. Rowe Price survey found, while 20% said it was more like an “extreme” amount. That takes away from other necessities like funding retirement or the kids’ college fund.

For parents, the trick is to strike the right balance.

Some tips:

* Research school quality.

The rankings site Niche.com puts out a report of best national school districts (https://www.niche.com/k12/search/best-school-districts/). Its top performers in 2019: Jericho, New York, Solon, Ohio, and West Lafayette, Indiana.

At the site GreatSchools.org, parents can crunch the numbers to discover which schools may be a good fit.

Beyond general rankings, you can add your own screens for factors that are critical to you. You may be most concerned with student-teacher ratio, graduation rates or special-needs services, so drill down into what matters most.

Then follow up with in-person work, suggests GreatSchools spokesperson Carrie Goux. Visit on-site, talk to other parents and read reviews, all of which give you valuable insights that numbers may not.

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A real estate sign advertising a new home for sale is pictured in Vienna, Virginia, U.S. October 20, 2014. REUTERS/Larry Downing

* Compare with housing prices.

The real estate site HomeUnion went a step further and combined affordable zip codes with the best public schools around the country. Its nationwide winners for 2017 were: Blue Springs, Missouri; Tuttle, Oklahoma; Fenton, Missouri and Boca Raton, Florida - all of which offer average single-family housing prices under $200,000.

For average home prices in your local zip codes, check out sites like Zillow.com or Trulia.com.

* Think outside the box.

If a particular school district is terrific but it's just too expensive to live in, then you may need to look at other options. High-performing kids may test into schools that are outside of their home districts, for instance.

You may also make the determination that it is cheaper to live in a more affordable neighborhood, but then look at charter-school options or pay for a private education.

Average annual K-12 private-school tuition for 2018-19 is $10,671, according to the site Private School Review. It's $9,631 for elementary school, and $14,575 for high school. Over 12 years, if the differential in house prices is more than $150,000, it might be worth it.

* Keep your head.

Realize that if you are paying more to get into a good school district, that gives you less financial flexibility, and you will likely have to cut back in other areas. In the T. Rowe Price survey, almost one in 10 parents said more than 50% of their income is going toward rent or mortgage – that is a lot of money.

On the plus side, if you do locate in a prime school zone, that will help you when the time comes to sell. According to Zillow’s 2018 Consumer Housing Trends Report, a home in a preferred school district is very or extremely important to a whopping 66% of buyers with kids. That is enough to make anyone house proud.

(The writer is a Reuters contributor. The opinions expressed are his own.)

(Editing by Beth Pinsker and Dan Grebler; Follow us @ReutersMoney or at http://www.reuters.com/finance/personal-finance.)

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