Student loan debt amassed by parents is growing faster than loans taken out by the student.
Parents’ loan debt has more than doubled over the last decade — exceeding $100 billion dollars or 10 percent of all outstanding student loan debt, according to the independent research firm FinAid.org.
“Parents of every income level are increasingly borrowing for their children’s college education. It doesn’t matter whether the parents are low income, middle income or upper income. There’s been dramatic growth in the percentages of parents who’ve been borrowing,” says FinAid.org founder and publisher Mark Kantrowitz.
Many parents who co-signed loans or borrowed money on their own for their children’s education now face the loss of their retirement nest eggs, homes and other assets….
Parents have an average of about $34,000 in student loans and that figure rises to $50,000, including interest, over a standard 10-year loan repayment period.
Some of these older Americans are still grappling with their first wave of student loans, while others took on new debt when they returned to school later in life in hopes of becoming more competitive in the labor force. Many have co-signed for loans with their children or grandchildren to help them afford ballooning tuition.
It’s probably best to avoid the twenty-year plan for paying student loans.
I recently read where a 40-something mom explained that since she and her husband were still paying down their student loans, saving for retirement and for her children’s college education had taken a back seat.
11.8 million borrowers aged 40 and older owe $278 billion in student loans, averaging almost $24,000 per debtor.
It’s relatively easy for a parent to qualify for a student loan: Qualifying for a parent Direct PLUS loan