Affording the Dream

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Don’t Rely Solely on Schools

Over the past few years, a number of lenders have launched education loan programs for private elementary and secondary tuition. While some schools offer loans directly, most are outside lenders from which parents can borrow money to pay for all or part of the child’s tuition. These programs vary by interest rates, fees and repayment terms.

For example, Academic Management Services (, a Sallie Mae company, offers a K-12 Family Education Loan that helps parents pay for their children’s private school education. Loans start from $1,000 to the entire cost of education. Borrowers have 20 years to repay the loan, and there are no repayment penalties.

Wells Fargo ( offers a K-12 Loan with no origination, dis-bursement or early payment fees. Parents can borrow from $1,000 to $25,000 annually, based on the cost of education, with an aggregate limit of $100,000, including all other educational debt. The money can be used for all education-related expenses, from tuition to uniforms to musical instruments.

Alternatives to education loans include home equity loans, home equity lines of credit, credit cards and personal loans.

Home equity loans typically have fixed interest rates; home equity lines of credit tend to have variable rates. The interest on both, however, may be tax deductible. The possible downside, though, is that by borrowing against equity, parents may put their homes at risk.

Some schools allow parents to put tuition and other fees on credit cards. While there may be some benefits to this practice—racking up airline miles, for example—remember that credit cards tend to have much higher interest rates than home equity loans and lines of credit.

Commercial banks and credit unions offer personal loans specifically for education. But in order to get a favorable interest rate, parents need to be in excellent credit standing.

In addition, families can set up a Coverdell Education Savings Account to pay for the cost of elementary or secondary education in private, public or religious schools. Parents and other family members can contribute up to $2,000 per child to an account per year. Any earnings on the money are tax free when they’re used for educational expenses.

But Onink cautions families against relying solely on Coverdell ESAs, as many of the tax benefits associated with these types of accounts will expire at the end of 2010 (unless legislation is passed to extend them).

Budgeting, cost cutting and saving—then investing that extra money—are still the most common elements to any successful funding strategy.

“On the whole, given the current economic climate that we’re in, I’d say for most families it’s harder to keep up in general,” says Onink. “But there is more financial aid available for both private school and college now than ever before.”

New Program for Kindergarteners

One of the newest, and most generous, programs to help families afford private school tuition is the Pauahi Keiki Scholars Kindergarten Program, a three-year, multimillion-dollar pilot program started this year and funded by Kamehameha Schools that provides need-based tuition assistance to children entering kindergarten at any of the 61 participating private schools in Hawaii.

As many as 720 students are expected to receive these scholarships from Kamehameha Schools, which will invest more than $47 million into the program in the next three academic years. In its first year, the program will award up to $6,000 in tuition aid to 240 students, with preference given to Hawaiian children.

Robert Witt says he believes this new program will be a significant investment in the public good and will make the community stronger. “Pauahi Keiki Scholars will allow Hawaii’s private schools to become more diverse, more affordable and more accessible to families who have not previously had a choice in the matter of their children’s education,” Witt says.

Rona Kekauoha’s youngest daughter, Haili, is one of the first recipients of this scholarship. She will be entering kindergarten at Iolani this fall.

Kekauoha, a third-generation Iolani graduate, believes in the lifelong benefits of independent school education. While she’s willing to make whatever sacrifices necessary to provide this kind of educational experience for her three daughters, she knows every bit of financial assistance helps.

“When I tell people that my kids go to Iolani, I always hear, ‘How do you guys afford that?’” said Kekauoha, who’s husband, Weldon, is a musician. “I’m totally upfront about it and say we wouldn’t be able to afford this without financial aid … The biggest benefit Iolani provides is that my daughters won’t fall through the cracks. You can’t put a price tag on that.”

About the Pauahi Keiki Scholars Kindergarten Program

The Pauahi Keiki Scholars Kindergarten Program provides need-based tuition assistance to kindergarteners attending non-Kamehameha private schools.

 • Eligibility

The program is open to all kindergarten applicants to any of the 61 participating accredited private schools approved by the Hawai‘i Association of Independent Schools.

• Funds awarded

The first phase of the program will provide $1.2 million in tuition assistance for the 2008-2009 school year. Award amounts will be made on a sliding scale based on the school’s tuition and the parents’ estimated family contribution. There is a $6,000 cap per student.

• Participating schools

For a list visit or call 534-8080 or 541-5300.

•  Applying for an award

Applications will be available in January 2009. (This year’s awards have already been given out to about 240 students.) Families should apply for this program at the same time they apply for admissions to a participating private school. Application deadlines vary by school.

• Award notification

Families will be notified by the end of April 2009 and will have until mid-May to formally accept the award.

• Continued funding

Once accepted into the program, families must reapply each year to receive continued tuition assistance through grade 12. Students must demonstrate satisfactory academic progress and financial need in order to remain in the program.

• Hawaiian preference

Kamehameha Schools’ policy is to give preference to applicants of Hawaiian ancestry to the extent permitted by law. To be considered under this preference policy, applicants must verify their Hawaiian ancestry with the KS Hooulu Hawaiian Data Center. Visit or call 523-6228.

• More information

Call 534-8080 or 541-5300, e-mail, or visit


Catherine Toth is a frequent contributor to HONOLULU Magazine. Her last piece for the magazine focused on prominent residents’ recollections of when Hawaii became a state.