Parents, it’s time to protect your kids from crushing student loans


“There is a student loan crisis in America. “

This title, or something similar, has been the title of hundreds of stories across the country over the past decade. In fact, that column was about saving for university and student loans eight years ago, stating, “With total student loan debt hitting the $ 1 trillion mark earlier this year and no slowing in It is a laudable goal to help children pay for their higher education. “That claim is still accurate today, except that instead of $ 1,000 billion, that number now exceeds $ 1,800 billion, according to the Student Financial Aid Resources website. This upward trajectory must stop, and parents have a responsibility to reverse this trend.

Tim sullivan

How can parents help?

Simply, they should stop allowing their children to make bad financial decisions and educate them early and often about the dangers of excessive student debt. To be shocked today by everything that is said in the first paragraph 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, period. Today, it is a known fact. Yet parents, who have protected their children from all kinds of physical and mental harm all their lives, fail miserably to protect them from the financial conflicts, anxiety and stress caused by student loan debt as they leave. the nest and begin to make “adult decisions.

A recent Wall Street Journal article addressed the financial burden that several Ivy League graduate programs charge their students for degrees that pay only a fraction of what would be needed to justify the expense. However, it’s not just Ivy League graduate schools that are the problem. Undergraduate programs across the country leave young adults with tens and sometimes hundreds of thousands of dollars in student debt.

Parents also deserve praise, as many try to shoulder much of the financial burden of college for their children, often at the expense of their own financial well-being. As a financial planner (and parent of two boys), this writer can understand the sacrifices parents make in time and money for the benefit of their children. However, parents often confuse the desire to help their children with university expenses with the responsibility of helping their children.

Parents may want to pay for their children’s college, but they are not responsible for paying for their children’s college. In fact, their first obligation is to secure their own financial future by saving adequately for retirement. For example, a parent who came to the office was concerned that their daughter would be accepted into an Ivy League school which was her first choice. If they were admitted, they felt obligated to pay for his school because they had the means. However, they were also behind in their own retirement savings and the cost was going to rise to $ 300,000 over four years. His middle finger – undecided!

Whenever possible, parents should help their children visit schools, research and apply for scholarships, and assess the pros and cons of their higher education options. Ultimately, choosing a college should also be a value proposition. If the total loan amount needed to attend one school exceeds what the student will earn per year after graduation, then they will need to choose another school. This is not about crushing a child’s dream or stifling their future success. On the contrary, it protects them from a system put in place to lend insane amounts to students, regardless of their future ability to repay them.

If you have a high school student today, please share this article with them. Maybe the system will change if enough smart students tell colleges and universities, “Thank you, but my parents taught me not to enroll voluntarily to ruin financially before I turned 20. I go elsewhere because I know that my future success won’t be determined by the school I attend, but by what I do with my studies after I graduate.

Wow, he’s a smart kid!

Tim Sullivan is the owner of Clarity Financial LLC, a fee-based consulting firm in Colombia, a CFP practitioner and a member of the National Association of Personal Financial Advisors and has obtained a registered agent designation from the IRS.

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