So you thought saving the cash for that ever-rising university tuition was going to be hard - try starting in kindergarten.
A Smart Money story has detailed a new trend in the United States - more parents taking out loans to get their kids into the classroom of their dreams. Your Tuition solution, one the leaders in these kinds of loans in the U.S., says that demand is already up for the year by about 10 per cent, with the company predicting it will give out about $20-million (U.S.) in the 2012-2013 school year. And some of those parents are diving into the red even before little Suzie graduates to Grade One.
According to writer Annamaria Andriotis, most of the demand is coming from wealthy parents, with annual incomes over $150,000. But as she points out, since many of the loans can be paid back over many years, some of these parents may be shouldering both that leftover kindergarten loan and the college tuition.
In a post entitled "Kindergarten student loans are a sad reality of our time," the Atlantic Magazine pointed out that the people benefiting most from these trend may not be kids, but the banks or schools getting as much as 20 per cent interest on loans as high as $40,000. That's "something you might look at as preying on parent who think it's their duty to send their child to a particular (and particularly pricey) school."
But parents may be hoping that a private school education will cover the cost of scholarships to university. That's the case for Bull Dunham, a project manager at a construction company who took a loan out for his son's high-school tuition - and hasn't yet saved anything for college for their two kids. "We'll figure out how to pay for it then, or with any luck they'll get scholarships," he told Smart Money. "Right or wrong, we're hoping out experiment works."
Would you consider a loan to send your child to a good private school?