Parents take on personal loans to pay rising school bills

June 9th, 2008

Many people have been wary of looking for credit recently, and those that have gone looking have often found it difficult to find. For this reason borrowing on mortgages or for a new car or a family holiday have decreased sharply over the last year. And yet certain parents are bucking the trend and taking out large loans to pay for private education for their offspring.

As many as 18,000 parents took out personal loans last year as fees increased to a record high. The average loan was for £9,065, with experts claiming that applications will rise in coming years as parents struggle with rising energy, fuel and food bills.

Interestingly, these figures come just a month after Chris Woodhead, the former chief inspector of schools, said that some parents were being ripped off as schools spent money on “five-star facilities” with little educational benefit.

According to the latest report released by Sainsbury’s Finance, 18,000 UK loans worth an estimated £165 million were taken out across the UK last year to cover school fees.

In the last 12 months independent school fees rose 6.2 per cent. The average private school charges £11,253 and the number of schools with fees over £25,000 increased almost fourfold to 51. The Independent Schools Council said the increases are due to staffing and that cost rises are comparable with the state sector.

A combination of a rise in the cost of living, more children going to private school and the cost of private education rising could lead to more parents taking out loans to help fund their children’s education.

In the current market parents need to make sure they are shopping around for the best loan rate available and not simply turning to their current account provider. Failure to shop around will mean an expensive commitment to education could financially ruin the concerned parents.

This entry was posted on Monday, June 9th, 2008 at 2:09 pm and is filed under Personal Loans. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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