A Blog by Jonathan Low


Aug 14, 2013

Preschool Loans: New York City Lets Parents Borrow to Pay Early Childhood Education Costs

It's not as if the student loan situation in the US is already out of hand: tuition, room and board at most 'selective' colleges and universities is now in the $60,000 range. That's per year. For four years.

Private elementary and high school costs in New York, the epicenter of America's credentialling neurosis, can run $40-50,000. Preschool? No prob: $25 to 35,000 will get you all the crayons your child can eat.

So, being the banking capital of the universe and the city that brought the world the wonders of financial innovation, New York's city government has launched a pilot program to offer loans to qualified families who want to go into debt even earlier than usual in order to land their budding genius in just the right toddler program.

Whether or not this is a good use of taxpayer funds must be left to the citizens of the Big Apple. And, not at all coincidentally, this happens to be an election year for the city's mayor. The current mayor is retiring thanks to term limits so the dozen or so hopefuls who aspire to replace him are all looking for ways to demonstrate how much they care. About everything.

Getting Americans, especially New Yorkers, hooked on debt is not exactly a hard sell. But even in the place that created the financialization frenzy,  starting at age 2 seems just a tad overly indulgent. JL

Janelle Burrell reports on CBS News:

After housing, child care is one of the largest expenses for families in New York City.
But now, there is an option for parents to get their kids into some of the city’s top pre-kindergarten programs with loans just for day care.
Tuition without room and board for undergrads at Harvard University is $38,891 for the 2013-2014 school year. For Princeton University, it is $40,170.
Pre-school in Manhattan is not far behind, with some elite day care costing families more than $35,000.
Jackie Krohn said she considered enrolling her 2 1/2-year-old son, Dylan, in one of the more prestigious programs. But she could not afford it.
“That’s just outrageous – 28 (thousand), that’s almost for four years,” said Krohn, of the Upper West Side. “So it was a little bit much, and it seemed impossible.”
But now, there is a way she may be able to help pay for those costs, using the same method she used to pay her college tuition – student loans. City lawmakers said their new pilot program should make life easier for those who had been driving themselves to financial hardship to fund their children’s day care.
“They were maxing out their credit cards, having to get huge interest rates,” said City Council Speaker Christine Quinn.
The pilot program is the first of its kind in the country, offering a 6 percent interest rate to borrow up to $11,000 for families with kids between 2 and 4 years old.
“The way the loan is structured is that it’s interest-only while the child is in childcare through pre-K and then when they enter kindergarten,” said explained Justine Zinkin of Neighborhood Trust Financial Partners.
On average, daycare costs run New York City families $13,000 a year. The new program is targeted at middle class families not eligible for other subsidies.
To qualify, applicants must have a household income of between $80,000 and $200,000 a year, with a credit score of at least 620. Applicants also must agree to a financial counseling session.
Not everyone likes the idea.
“I wouldn’t borrow,” said Hillary Chase of the Upper West Side.
But Krohn said she’d be more than willing to sign up.
“It’s their first school experience,” she said. “So you want that to be positive, no matter what cost.”
Parents can begin applying for the loan program as of Tuesday. The pilot program will accept 40 families for the upcoming school year.


Samuel said...

This is good, because it can still give you the opportunity to send your child to preschool education. But it’s bad that we have such things as a whole paid for and you need to pay a lot of money for it. Although I gave mine to Reggio Emilia in Singapore and it was a good decision

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