Parents, it’s time to protect your kids from student loan breakdown

“America’s got a student credit crunch.”

That headline or something similar has been the title of literally hundreds of stories across the country over the past decade. In fact, eight years ago that column looked at saving for college and student loans and said, “With total student loan debt surpassing $ 1 trillion earlier this year and no slowdown in sight, it’s a laudable goal To help children pay for their higher education. “That statement is still accurate today, except that the number is now over $ 1.8 trillion instead of $ 1 trillion, according to student funding resources page finaid.org. This upward trend must be stopped and it is the responsibility of parents to reverse this trend.

Tim Sullivan

How can parents help?

Quite simply, stop helping your children make poor financial decisions and instead educate them early and often about the dangers of excessive student loan debt. To be shocked by everything that is said in the first paragraph today would be like reading a headline that says, “Smoking causes lung cancer” and being surprised. News flash, smoking causes cancer, period.

Excessive student loan debt causes great financial damage to millions of borrowers. Today this is a known fact. Yet parents, who have saved their children from all sorts of physical and emotional harm throughout their lives, fail miserably to protect them from the financial hardship, anxiety, and stress caused by student loan debt, just as they do Leave nest and start making money. “Adult” decisions.

A recent Wall Street Journal article looked at the financial burden several Ivy League graduate schools place on students for degrees that pay a fraction of what it would take to justify the cost. The problem isn’t just with the Ivy League graduate schools, however. Undergraduate programs across the country leave tens of thousands and sometimes hundreds of thousands of dollars in student loan debt for young adults.

Parents, too, deserve some praise for trying to shoulder much of the financial burden of studying on their children, often at the expense of their own financial well-being. As a financial planner (and the parent of two boys), this author can understand the sacrifices parents make in both time and treasure to help their children. Even so, parents often associate the desire to help their children with the cost of their studies with the responsibility to help their children.

Parents may wish to pay their children’s college, but they are not required to pay their children’s college. In fact, their first commitment is to secure their own financial future by saving appropriately for retirement. For example, a parent who walked into the office worried that their daughter would be accepted into an Ivy League school, which was her first choice. Once admitted, they felt obliged to pay for their school as they had some funds. However, they were also behind on their own retirement benefits, and the cost would be a staggering $ 300,000 over four years. Your major – undecided!

If possible, parents should help their children attend school, seek and apply for scholarships, and weigh the pros and cons of their higher education. In the end, however, choosing a college must also be a value proposition. If the total amount of credit needed to attend a school exceeds the amount the student will earn per year after graduation, they will have to opt for another school. This does not destroy a child’s dream or stifle their future success. On the contrary, it protects them from a system that was put in place to lend insane sums of money to students regardless of their future ability to repay it.

If you have a high school student today, share this article with them. Perhaps the system will change if enough bright students say to colleges and universities, “Thank you, but my parents taught me not to volunteer before 20 depends on the school I go to, but on what I get with my education when I graduate. “

Wow, that’s a smart kid!

Tim Sullivan is the owner of Clarity Financial LLC, a fee-paying consulting firm in Colombia, a CFP practitioner, and a member of the National Association of Personal Financial Advisors, and is an IRS Enrolled Agent.

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