Parents Struggle As Sources of Tuition Funding Dry Up

Online, June 9, 2010 (Newswire.com) - A study by the National Association of Independent Schools (NAIS) in 2003 showed that 1 in 5 parents of students in private schools were paying for tuition and expenses by using some form of credit - typically a personal loan, home equity loans or credit cards. Most private school parents relied on a variety of sources to meet expenses, including financial aid. Other sources besides aid and credit included money from relatives and withdrawals from retirement funds and IRAs.

Many of these sources of funds were adversely impacted by the recession over the last 2 - 3 years. With credit increasingly tight, and home values dropping, equity loans are scarce. Some lending industry studies show at least 25% of homeowners with mortgages are "upside down" - that is, owing more on their home loan than their current value of the property.

Private schools with financial aid programs were typically a good resource for parents earning low to moderate-incomes, fewer schools have the financial resources to be able to do so now. The U.S. Department of Education estimates private school enrollment declined by 3% the years between 2006 and 2010, reducing the amount of funds that schools have available for operating costs - let alone budgeting extra for student financial aid programs. The recession has impacted families heavily, causing donations from alumni to fall drastically. Even schools that have significant investments or enjoy the benefits of an endowment have seen the income from investment portfolios drop.

Shrinking retirement funds means that older relatives are often no longer able to be as generous in their educational assistance as well. Financial assets are worth less than they were before the recession and many IRAs, pensions and retirement accounts significantly lost value or were used to meet other recession-related expenses (such as job loss).

Many parents will tell you that providing their children with the best available education is an essential, but it is an essential they may no longer be able to afford. For parents who remain committed to providing their children with private school educations, loans and credit cards are often the only remaining options, but even personal loans often come with higher interest rates and fees than they did even a few years ago.

Find out if you qualify for a personal loan of up to $250,000.