Ladies and gentlemen, have we all lost our minds? One of my sources today (thanks, Mary) alerted me to the following article from SmartMoney, which indicates that student loans are on the rise. For kindergarten.
There is so much that is wrong with this picture.
Student loans are already a significant problem—and that’s just for college. But if parents start borrowing money to send their kids to private kindergarten, private middle school, private high school, then we are in a world of trouble. Has it really come to this? Is our educational system so broken that parents feel they must pay for private education, even from age 5, and even if they can’t afford it?
Let’s talk about the fact that private schools cost, on average, almost $22,000 a year now. Let’s talk about the interest that you’ll pay on these loans, which ranges from 4% to 20%. The article mentions that lower rates are given to parents with higher credit scores. Folks, if you are borrowing money to send your kid to private kindergarten, and you’re paying 20% on that loan because you have terrible credit, perhaps you should take a look at your financial priorities.
Let’s also talk about what this means for the rest of your financial picture. Because if you’re borrowing money to send your kids to private school, I’m going to bet that you aren’t saving for college. And are you saving for retirement? Are you saving for anything?
The family in the article admits that they’ve saved $0 for college for their two children.
Instead, he says, they’re trying to give them the best education now in the hopes that it’ll open doors to better colleges. “We’ll figure out how to pay for it then, or with any luck they’ll get scholarships,” he says. “Right or wrong, we’re hoping our experiment works.”
I hope your experiment works, too, sir. Because if your children don’t get scholarships and you can’t pay for college out of pocket, you’re looking at tens of thousands of dollars in future student loans, as well—or saddling your kids with that debt. Good luck retiring on that.
Would you take out a significant loan to put your 5-year-old in private school?
(Photo from finkangel on Flickr.)