Shrinking Retirement Funds and IRAs Mean Less Money Available to Pay For Private Education

Online, June 21, 2010 (Newswire.com) - Most parents of children attending private schools have typically relied upon a mix of several sources to meet tuition and other school expenses. Besides financial aid, some of the other sources utilized by private-school parents included money from relatives, withdrawals from retirement funds and IRAs and various forms of credit, including unsecured loans.

As the recession of the past 2 - 3 years has stretched on and on, it has heavily affected the value of retirement funds, IRAs and investment portfolios, for both individuals and institutions such as schools.

Shrinking retirement funds and IRAs, as well as many investment portfolios has cut the excess savings of individuals - and for those students who receive help with their tuition as a gift from older relatives and grandparents, the hit taken by retirement funds has caused a lot of financial pain. Older relatives are often no longer able to be as generous in their educational assistance.

Private schools with financial aid programs have usually been a good resource for parents earning low to moderate-incomes, fewer schools have the financial resources to be able to do so now. The effect that the recession has had on the finances of alumni has often resulted in a fall in the number and amount of donations. Even schools that have a significant investment portfolio or enjoy the benefits of an endowment have seen the income from their investment portfolios drop. To a great extent, these schools financial aid programs are heavily dependent on charitable contributions and investment income.

As a result, parents who have remained committed to sending their children to a private school have relied more heavily on credit, including personal loans and credit cards over the past few years.

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