Do you believe with the cost of a standard 4 year university education expected to climb to over $137,000 (TD Bank) for your 1 year old child, you’ll be able to retire?
If you do then you must be one of the lucky to have paid off your student debt. Some parents today though are not so lucky. Not only are they still paying off their own student loans but are now also assuming the student loans of their children.
Instead of being carefree and traveling around the world or basking in the sun on a white sandy beach, many parents are in a panic about their retirement.
- According to a survey by the National Institute on Retirement Security 54% of parents worry that their own retirement will be jeopardized because of their child’s student loan debt.
- 94% of parents of college students ages 18 to 24 say they beleive their personal share for their kids’ college student loan debt is increasing.
Student loans are now the second largest form of consumer debt (home mortgages are in the number one position). Over 40 million Americans have student loans and an alarming number of these indebted people will never recover financially. Student loans have become a “catch 22” situation. Many parents didn’t save enough for their retirements because they were trying to pay off their own student loans.
According to Fidelity’s annual College Savings Indicator Study 80% of parents are concerned that student loan debt will hinder their child’s ability to be financially independent after graduation. And 84% of parents say that college debt will impact future generations’ ability to buy a home. To help their kids become financially independent many parents have chosen to assume the debt load of their children’s student loans to give their kids a chance to succeed in life without an enormous financial burden they may never be able to recover from.