Parents drowning in debt from sending their children to college
What parent doesn't want to be able to send their child to college? It used to be parents would scrimp and save to do so.
Instead parents are now drowning in debt to make it happen. A new study shows one in five households are deep in college debt.
Jean Andes and her husband Mark Hilliard had the best of intentions when it came to their kids' college.
"It's hard to save when you're paying the mortgage and your utilities," said Andes.
And when their daughter, Kayla, and son, Ian, went off to school, scholarships didn't cover it. So they took out loans-- lots of loans.
Two four-year degrees later, the couple is $120,000 dollars in debt.
“It cost us about as much to borrow to put our two children through college as it did to buy our house," said Hillard.
There's an increasing trend with people who are age 40-50 having the fastest growing amount of student loan debt outstanding," said Mark Kantrowitz of Finaid.com.
And it's not from their own undergraduate degrees.
"Parentplus loans, from their graduate education and from cosigning on private student loans," said Kantrowitz.
Parentplus loans are a relatively new kind of loan from the federal government.
Rates are capped at 7.9% and the interest is often tax deductible. But even so, the average debt is $34,000.
“It's the only form of federal education loans that doesn't have an annual or aggregate loan limit," said Kantrowitz.
A critical point when combined with the climbing cost of college.
"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," said Kantrowitz
That’s exactly Andes and Hillard did for their children and even though they have no regrets about co-signing, they admit this debt is making a dent in their lifestyle and affecting their retirement plans.
"Now that the kids are gone we could do more traveling if we didn't have the student loans to pay," said Hillard.
Kantrowitz makes a point of telling parents and students to only borrow what they really need and not up to the loan limit. Kantrowitz also said you should never co-sign or take out a loan that will take more than than 10 years to pay off.
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