Here's a hypothetical example. A family has two children. The older child is starting kindergarten this year. The younger child is starting kindergarten in three years.
Suppose that a decent private school costs $20,000 per year, and that the appropriate real discount rate is 4%. (Considering that tuition can be expected to continue to rise faster than inflation, that discount rate may be too high.) Tuition is paid at the beginning of the year.
We calculate that the value of education for those two children is $388,000.
That's how much extra rational parents might pay for a house in a neighborhood with good public schools instead of living in a neighborhood with bad public schools (no doubt full of minorities) which would force the parents to pay for private schools.
I'm told that private schools cost more like $30,000 in New York City, so make that a $582,000 premium for the suburbs of New York City. (However a growing percentage of private school students have their grandparents paying the bills.)
I love this quote from the NY Times article:
"My father pays tuition for the girls, and I'm just grateful beyond belief," said Sunny Bates, who has one daughter at the Dalton School in Manhattan and another joining her there this year. "I think that's incredibly common. You have all these people who grew up in New York when it wasn't so ridiculously expensive, and are now in careers in the arts, or the nonprofits, that don't pay very much, and they couldn't possibly give their children the kind of life they had without some help."