Parents borrowing more money to help students with college costs
Expert cautions parents against shortchanging retirement funds
InvestigateTV - The most recent study by NerdWallet found parents are borrowing an average of $11,000 for their student’s college education. Parent Plus Loans at public four-year universities grew to 12% in 2016 up from 7% 20 years earlier.
Elizabeth Renter, a data analyst with NerdWallet, explained parents are sometimes foregoing their long-term financial goals to help their children with college costs.
“We found that more than one fourth of parents who have taken out these kinds of loans say it’s affected their retirement plans,” Renter said. “So, at NerdWallet, we recommend that parents think long and hard about taking out loans to help their students go to college.”
Renter said it is vital to fill out the Free Application for Federal Student Aid (FAFSA) each year. FAFSA qualifies you for federal grants, loans and any potential aid available in many states and opens on October 1.
Another way to get funding, suggested Renter, is to explore federal work study options. She added that you should always tap federal student loans before turning to private or parent plus loans.
Renter pointed out that as a parent you are far closer to retirement than your students are, so in the end they might be the better ones to shoulder that debt.
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