Where did those home equity loans and lines of credit go? Irvine Renter points out that the situation went really toxic when people realised that they could take out money, not just for renovations – which would then increase the house’s value – but for consumer spending. Boats, cars, holidays, that kind of thing. But I can see that many people who would balk at spending on these kinds of things might consider using their home equity for something they consider more important, more reasonable, more of an investment.

Back in the Australian context, I’m wondering how many households have been mining their home equity for education.

Under the previous government, a culture was built up whereby private education has been valorised at the expense of public, and (because of poorly designed funding systems) rewarded disproportionately. At the same time, the public school system has been starved of resources to the point where even parents who would rather choose a properly constituted public system feel compelled to go over to the private system simply because the local high school is too run down.

The peak body of the “independent” (private) schools has relentlessly pushed the line that private schools aren’t just for the super-rich, and that many parents of modest means are “making huge sacrifices” to send their children to private schools. We used to have the apocryphal taxi driver trotted out: “We have taxi drivers’ children at our school!” It’s difficult to prove or disprove the industry’s claims that our elite schools are filled with the happy offspring of taxi drivers and process workers, whose parents are forgoing the second and third car and the annual holiday to Tuscany in order to fund their childrens’ education.

I think you can see the holes in this argument. I have been looking around in vain for the second and third Mercedes which I can hock, and the Tuscan holidays, and the beach house which I can sell, but sadly, they are not there.

The marketing spin skirts around the unspoken ideas “if you really love your children, you’d go private” and “education is a competition, and private education will give your kids an edge”. And of course there was the idea, enthusiastically kicked along by the last Federal government, that private schools espouse values whereas public schools don’t. It puts a great deal of psychological pressure on parents. I’m thinking that many parents – and this is conjecture only, mind you, and this is a blog, not the Fin Review, so… many parents may have been doing the equity mining thing to put their kids through private school.

Recently articles like this and this have begun to appear about school fee defaults and home reposessions. Note that the second article describes a mother who contemplated suicide when she was forced to consider taking her kid out of private school. Moral panic can be a dangerous thing. Note also that the Christian Values of the private system, the superiority of which has been rammed home to us by marketers and the Howard government, seems quite a flimsy facade when they start behaving like the businesses they are.

The articles cite job loss, loss of bonuses and the effects of declining interest rates on grandparents as the reason for the defaults. The writers don’t mention the effects of the credit crunch and the end of the home ATM bonanza. They are talking about people losing houses. It’s just my guess that housing credit is contributing to the situation.

The outcome, of course, is rising enrolments in the previously despised public system. You’d think I’d be pleased, because surely it’s possible that a genuine crisis in the private system might lead the Labor government and State governments to re-think the current neglect of the public school system and decide to fund a system which will educate all comers, whether they’re headed for the boardroom or the coolroom. Well, it’s possible. But it’s very probable that before any such desirable policy change takes hold, I’ll see the same effects on the public system as I saw on the public transport system after the rise in petrol prices: severe overcrowding and overstrain on the system without any commensurate action by State governments to respond to the increased demand. All just as Exploding Boy is beginning his secondary school career. Lucky us.