On Your Side
College debt putting a big strain on parents supporting their students
Jean Andes and her husband Mark Hilliard had the best of intentions when it came to saving for their kids' college, however, Jean admits, "It's hard to save when you're paying the mortgage and your utilities." So when their daughter Kayla and son Ian went off to school, scholarships didn't cover it. They took out loans. Lots of them. Two 4-year degrees added up to $120,000 worth of debt. "It cost us about as much to borrow to put our two children thru college as it did to buy our house," Mark says. They're part of a growing number of Americans facing massive loan amounts to help their kids cover college costs. In fact, Mark Kantrowitz with www.Finaid.org says, "There's an increasing trend with people who are age 40-50 having the fastest growing amount of student loan debt outstanding." He points out it's typically not debt from their own undergraduate degrees they owe. Instead, it's debt like parent plus loans, from their graduate education, and from cosigning on private student loans. The amount borrowed for parent plus loans, the loans offered through the federal government, has doubled in the last decade, with an average balance of $34,000. More parents than ever are now borrowing for their childrens' educations and the average amount of debt the parents are taking on is also growing. "It's the only form of federal education loans that doesn't have an annual or aggregate loan limit," Kantrowitz says. That's a critical point when combined with the climbing cost of college. Mark explains, "What we didn't get in grants and scholarships we financed." Also important to note Kantrowitz says, "Before the credit crisis about half of all student loans required cosigners. In the aftermath of the credit crisis and today more than 90% of new private student loans require cosigners." Jean and Mark cosigned for their kids. They hope to have everything paid off in seven to ten years. Kantrowitz stresses parents shouldn't cosign for or take out loans that will take longer than ten years to pay off. "If they're borrowing more than that its going to eat into their retirement," Kantrowitz warns. Even though they have no regrets, jean and mark admit this debt is making a dent in their lifestyle. "Now that the kids are gone we could do more traveling if we didn't have the student loans to pay," Mark says. Kantrowitz makes a point of telling parents and students to only borrow what they really need. There's a tendency to borrow to the loan limit and that is not always necessary.
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