Study Finds That Many Families of Private-School Children Resorting to Loans to Pay For School

Online, July 20, 2010 (Newswire.com) - N.A.I.S., the National Association of Independent Schools surveyed parents of primary and secondary private school students in order to determine the sources of money paid to schools in the form of tuition and expenses.

The study, released in 2003. found that one of every five parents pay for their children's education using some form of credit - including personal loans, credit cards and even short-term loans such as payday loans. Parents were also found to be resourceful in that they often cobbled together funding from multiple sources, such as gifts from relatives, home equity loans and withdrawals from investment or retirement funds.

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The bad news is that many of parents' sources of funds have shrunk or disappeared entirely over the past 2 - 3 years of recession. Home equity loans are no longer an option for many families. Home values have dropped by as much as 50% in some areas of the country, and a full 25% of homeowners with mortgages are upside down, meaning that they owe more on their homes than the homes are worth according to current real-estate market values.

Although few parents who send their children to private K-12 schools regret the decision for academic reasons, finding a way to pay for their children's private school educations is more difficult or impossible for many families than it was in the past, leading more families to consider loans to finance their children's educations or to opt out of the private school system entirely and send their child(ren) to public school. Even financial aid is less plentiful than in the past. Where financial aid from private schools was once funded almost entirely by donations from alumni, tuition and return on investments, donations have shrunk, enrollments are shrinking and investments have shown less return or even a loss.

For parents still committed to providing their children with private school educations, loans and credit cards are too often the only remaining options, and even those may now have lower limits and much higher interest rates than two or three years ago.

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