Now student loans start in kindergarten

Student loans can start in kindergarten, reports SmartMoney.

Though data is scarce, private school experts and the small number of lenders who provide loans for kindergarten through 12th grade say pre-college loans are becoming more popular. Your Tuition Solution, one of the largest lenders in this space, says demand for the upcoming year is already up: This month, the total dollar amount of loans families requested rose 10% compared to a year ago; at that pace, the company expects its total funding to rise to $20 million for 2012-13. Separately, First Marblehead, which exited the market in 2008, reentered last year as demand for loans began to rise.

This doesn’t sound like a smart money decision to me.

Via Gawker.

Even senior citizens are burdened with student loans. Americans 60 and older owe $36 billion, according to research from the Federal Reserve Bank of New York.  It is not uncommon for Social Security checks to be garnished or for debt collectors to harass borrowers in their 80s over student loans that are decades old,” say consumer advocates.


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  1. Good point.

    A parent here in San Francisco told me her family had taken out a second mortgage to pay the tuition at an unaccredited private school that, as a for-profit, offers no scholarships. All this so her child didn’t have to go to public school with the likes of (horrors) mine (who did survive without becoming illiterate gang members and even got into good colleges). You have to wonder what people are thinking.

    • Here are some of the things they could be thinking:

      –Their zoned school flat-out stinks and/or is dangerous, and they don’t have some combination of the time, willingness, or ability to make the school better, or to compensate for the school’s deficits on their own.

      –They don’t have some combination of the time, willingness, or ability to navigate the various high-stakes tests, lotteries, interviews, auditions, and so forth that are often required to gain entry to better district schools or magnet programs.

      –They simply like the private school and feel it’s a better setting for their child. De gustibus non est disputandum.

      I’m on your side more often than not, but your opposition to parent choice borders on the pathological.

  2. It might make sense if the parents have reason to believe that their disposable income is likely to jump in the future. For example, a family with a SAHM who plans to resume full-time employment when the younger sibling is older might need to take out one of these loans for the first few years. Private schools typically expect both parents to be working full-time and their financial aid package will leave a gap if the mom chooses not to.

  3. Cranberry says:

    Roughly 20% of families that applied for aid to pay for their children’s kindergarten through 12th grade private school education had incomes of $150,000 or more, according to 2010-11 data, the latest from the National Association of Independent Schools. That’s up from just 6% in 2002-03. Those who don’t get approved for free aid, like grants, increasingly turn to loans, experts say.

    It could be a financial strategy to gain time while other commitments are brought into line. It takes time to sell a vacation home, or to downsize. The size of the market was probably obscured during the boom years before 2008, when it was easy to get a mortgage.

    The Boston Globe has published an in-depth series of articles on public school assignments in Boston. Some rising kindergartners may not have a seat in a public kindergarten next year:

    Some 344 would-be kindergartners have been left without an assigned school for the fall, 128 more than last year. Although they have been placed on waiting lists for up to three schools they applied to, they may never get in.

    That scenario is compelling parents to consider other schools – often the less desirable ones that have not filled up yet – or private school options or a move to the suburbs. Many parents are stunned by their predicament.

    Some families are faced with the choice of moving, going private, or doing without kindergarten.

  4. Deirdre Mundy says:

    According to Freaknomics, K-3 instruction is most important for future economic success— these parents may just be making a rational economic choice.

  5. Deirdre,

    If students haven’t MASTERED the concepts of reading, writing, and math by the end of third grade, chances are they’ll be doomed to struggling in school for the rest of their academic lives, and these days college degrees are nothing more than debt slavery.

    Everyone should go to youtube and search for ‘Is college a rip-off’ and watch the short video.

    • Don’t watch the video if you’re still in college! You’ll probably end up on some list somewhere that’ll make it ten times harder to get student loans…