| 15.01,12. 11:32 AM |
Parents go into debt for private
January 15, 2012
PARENTS are increasingly taking out personal loans or refinancing mortgages so they can send their children to private schools.
Families are so desperate to keep their children out of the public school system they are willing to put themselves in debt for the rest of their working lives, or are tapping into grandparents' nest eggs.
While public school fees are voluntary and the cost of excursions and stationery is only a few hundred dollars a year, tuition fees approach $30,000 a year at some Sydney private schools - and the cost of educating a child from kindergarten to Year 12 can break the $500,000 ceiling.
Yet private schools have waiting lists and parents are more than willing to make huge sacrifices to send their children to private schools.
Westpac spokeswoman Supreet Gosal said thousands of parents had drawn equity from their home loans to fund the annual tuition fees and other education costs. Others were taking out personal loans.
AMP financial planner Mark Borg said digging into the mortgage was becoming a popular strategy.
And more and more parents were also asking grandparents for assistance.
"Redrawing the mortgage is becoming more common and so is asking grandparents to joint-fund private school fees," he said.
Home loan advisory service Buyer's Choice said about 40 families, many of whom were struggling, had turned up in the past year for a loan to pay for school fees and the number was growing year by year.
Spokesman Mike McClure had introduced a service called Education Access and advised many parents to pay up to six years of their child's school fees in advance by drawing on their mortgage.
"The interest from the home loan will be offset by the rise in school fees that they don't have to pay," Mr McClure said.
"We'd probably have thousands more customers calling us for help if they knew it was possible and the schools were receptive to taking advance payments.
"Financing a child's education has become a major problem for many parents, no matter what their income is."
Sydney financial planner James Gerrard from PSK Financial Services said some of his clients had run into trouble paying school fees with a limited cash flow and between $10,000 and $30,000 already owing on their credit cards.
Mr Borg said while many parents were finding it tough, they were also unwilling to cut back on the quality of their family's lifestyle.
"The days of starving yourself to send your child to a good school have passed," Mr Borg said.
"More and more parents are realising not only should they send their child to a good school but they should also give them a good balance of lifestyle."
Australian Scholarships Group development general manager Frida Kordovoulos said: "It affects every family of every child at every school.
"Parents often think about the cost of education in terms of fees, but that's not where it ends. You have travel, uniforms, books and extracurricular activities on top of that."
Last year the group calculated it could cost $505,694 to educate a child to Year 12 at an exclusive private school.