Friday, August 31st, 2012
Editor’s Note: Parents.com has partnered with LearnVest.com to bring you a monthly series of posts about money topics related to moms. These guest posts will be shorter, edited versions of longer features written by Cheryl Lock, Editor at LearnVest.
As we all know, the cost of parenting can last long after the kids are grown and out of the house. Money spent on diapers and formula morphs into summer camp fees and back-to-school gear. Then, before you know it, you’re paying for your kid’s college loans well into your 40s and 50s.
Okay, so that’s probably not the way most parents envision spending their money as they near retirement, but according to recent data, quite a few are already feeling that sting. And it makes sense: The average cost of four-year universities rose by 15% between 2008 and 2010, and keeps on climbing higher. Not every family is willing to tax themselves beyond their limits to meet those new sticker prices, though. In a recent survey, only 53% of parents (down from 64% in the 2009-2010 academic year) said they would stretch themselves financially to pay for college.
But taking out loans that you might not be able to pay back is a financial road you don’t want to go down. Data released recently by the Federal Reserve Bank of New York shows that middle-aged Americans are actually the age group struggling the most with student loan payments. Not only has the number of middle-aged Americans with student loans doubled since 2005, the delinquency rate (the percentage of debt on which no payment has been made for 90 days) for borrowers ages 40 to 49 was 11.9%, compared to a delinquency rate of 8.7% for borrowers of all ages.
While it’s definitely true that some of these over-40 debtors are still paying off their own loans from college, it appears that many are parents who have taken out student loans to help fund their children’s education. In fact, The Wall Street Journal reports that the federal PLUS program, which allows parents to take out loans to help pay for education expenses not covered by other financial aid, is among the fastest-growing of the government’s education loan programs.Add a Comment