Inside Wealth

Meet the $1,250-an-hour tutor

$400,000 to teach: The rich turn to tutors
$400,000 to teach: The rich turn to tutors

Nathaniel Hannan looks and sounds like many other young, highly qualified teachers.

The 33-year-old Indiana native went to Notre Dame and got his masters at Oxford in philosophy and theology before becoming a high school teacher in Washington, D.C. He loves to teach and has a gift for communicating.

But today, instead of working for a school, Hannan tutors the children of wealthy families. And he makes up to $1,250 an hour.

"It's different clients, but the same business," he said.

Actually, it's a different business entirely—and it's growing rapidly. While much of the American education system is struggling with tight budgets, overcrowded classrooms and low teacher pay, the tutor economy is booming.

(Read more: Five things US can do to lead the world in education)

Nathaniel Hannan

More and more of the world's millionaires and billionaires are seeking at-home teachers to give their children a leg up in the increasingly competitive and important education race. And, as the number of rich people grows around the world—and as more of them split their time between multiple homes in different countries—they are creating their own mobile, ultra-private schools in their homes.

Tutors International, a London-based tutor agency that hires and places many tutors in the U.S., said its business this year will nearly double over last year.

The typical salary for a full-time tutor today has jumped to between $70,000 and $120,000 depending on the requirements. But Tutors International has placed one tutor who is making $400,000 a year and another who was paid $80,000 for just 16 weeks of work.

Along with their pay, most tutors also usually get free housing, cars or drivers, paid travel and meals, and occasionally even a private chef and personal assistant.

"For these families, they look at the costs of just fueling their jet or buying a new sports car, and spending $100,000 or more for a tutor is not a great expense," said Adam Caller, the founder of Tutors International and a former tutor and teacher himself. "They know education is important."

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Caller said his clients fall into three basic categories. First, there are rich families who want to supplement their children's schooling with added subjects and help them with homework. Second, there are families who have children with special needs, where home schooling is more effective.

(Read more: A surprising group stands in way of income equality)

Many of his clients, however, fall into the third category: rich families that travel between multiple homes around the world and don't want to be tied to one location because of their children's school. Some of these families are also so rich and famous that their children would be mobbed at a regular school.

"They may be based in New York, have a boat in France and a house in Mexico and in South Africa, and they want to use them all," Caller said. "With home schooling and a tutor, they can travel wherever they want and still get to be with their children."

Caller said the tutor he placed for $400,000 a year was for a rich family on the West Coast. The student was having trouble with school and with substance abuse, so the tutor had to home-school the student and coach the student and his family through rehab.

(Read more: Will the Grim Taper be a body blow to the wealthy?)

Caller said the job was "quite challenging," but the tutor also received an apartment, a car, dinner every night and first-class travel.

Hannan, who is currently tutoring in Barcelona, Spain, said he's worked in nine countries over the last seven years and his travel is usually "to great places and great environments."

But being a tutor to the rich has its downsides, Hannan said.

"You have to be very flexible all the time, " he said. "Clients may need anything at a moment's notice and you have to get it right the first time. So there's not a whole lot of patience for error."

Andrew Knight, an executive at Tutors International, said wealthy parents sometimes have unrealistic expectations for tutors, especially when it comes to helping their kids get into the best colleges or get top grades.

"Some of these families are used to paying for whatever they want," Knight said. "They don't understand that we can't guarantee a certain GPA or college."

(Read more: US report card: $115,000 for a C minus? )

He said parents can also sabotage a tutor's efforts to motivate a student. One tutor said he would take away the student's iPad until he did his homework. The parents, however, quickly gave the student another one.

"We have to get results with these kids," Hannan said. "That's a great deal of pressure on us." But he added that "I'm working with kids who really need me and I make a significant difference for those children, and it's what I want to do with my life, so it's great."

Since Tutors International employs its tutors—rather than placing them for employment by the families—the company monitors performance and receives constant feedback and performance reports from both the families and the tutors.

"We don't take our fee and walk away," Knight said. "We have an interest in everybody being happy along the way."

—By CNBC's Robert Frank. Follow him on Twitter: @robtfrank.