Really….? Does the school system suck so bad that parents are putting their little tykes in private school for kindergarten and then…financing it? Yep, for more and more parents the decision to make sure their young childeren get a quality education is pushing them to get student loans sooner then ever.
Costs are Rising
This trend for parents going for pre-college student loans has increased by 10% since last year and it appears to have a direct correlation with private school tuition going up. The average private school costs $22,000 a year. Although many schools have increased their financial aid the difference in aid vs. tuition is getting wider and therefore making it more difficult for parents to pay now.
Just like aquiring any other type of credit your credit score matters. Interest rates can vary as widely as 4 – 20% depending on credit-worthiness.
The lenders have begun to wrangle in the terms of these loans. Whereas you used to be able to have a private student loan stretch out as long as 20 years lenders are more stringent on payback periods. One lender even encourages parents to pay off their loan within 10 months and if the parents can do that they will have 0 interest costs.
Why are parents doing this?
Most parents want their childeren to have at least the same if not more opportunity in life than they did. The belief for many parents is that having their kids in private schools will give them the added tools to get in to a good college and therefore be able to get a better paying job in the future. This is an experiment that we will have to wait out to see if it pays off.
To learn more go to smartmoney.com article