Posted by: Kate Ashford | March 29, 2012

Um. Student Loans for Grade School?

Danger: Deep Hole

Right. This.

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.)


  1. Yes, the story was on the news this a.m.

    Well, I wasn’t too shocked. I know that there are thousands of children in private schools in Chicago.

    Some years ago I worked at a private school in the cafeteria. I don’t ever remember my parents giving me $50.00 or $100.00 (bills) to buy a lunch. These children carried huge sums of money.

    You wonder if all the families do have the finances to put their kids in these schools. I have no idea how they got or get these funds. I do know that it does cost big bucks for a private education.

    Most of us do not have options (yeah …. public school) but to keep securing loans …. year after year. To me that would be impossible to live with …. knowing we owed so much for private education.

    Perhaps these parents do not really care about their future finances. As long as they keep working …. then, keep borrowing …. parents seem to think it will all be okay in the end.

    I couldn’t do it. We did not have those types of resources to privately school 4 children.

    Our lids are alright …. all are happy and working. It looks as if we saved ourselves millions! Wonder what I can buy with the savings? Maybe a pair or two of Croc shoes for summer.

  2. I think grad school in general is overrated. I have plenty of co-workers who have advanced degrees. Just because you have a masters doesn’t automatically mean you will get that promotion. Most earn the same as me and I don’t have one. I don’t think that going to school at night will earn more money than me staying in the office later to finish a project. I can understand investing in yourself when the pay off is pretty clear, but in these uncertain times, why on earth would you borrow money when you are not sure the education will pay off?

  3. The best thing that parents can do to give their kids the greatest chance at a successful K-12 education is to be be involved in their day-to-day school assignments. Review homework, ask questions, challenge them. Public schools are great but some parents seem to want to “check-out” of their kid’s school lives and “pay” a private school to do it for them. No a formula for success in my opinion

  4. Grotesque!

  5. Kate, sometimes trends that seem ridiculous to us now become “the way things are” tomorrow. Remember when the Internet first got traction and business owners said, “Why the heck would I need a website?” So while I certainly wouldn’t have taken loans for my children at that age, I can also see how it might become necessary for my grandchildren, who aren’t yet school-aged. Pretty scary thought.

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