34 Percent of Parents With Student Loans Don’t Think They’ll Be Able to Pay Them Off

A growing number of parents who took out loans to pay for their children's education are wondering if they will be able to pay off their debt. Many are borrowing against their retirement.

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An elderly couple sit at a kitchen table and look over their finances
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It’s no secret that college tuition is unaffordable for most Americans — and at some universities, that it’s costing borrowers — and their parents — not only money and entering debt for the rest of their lives but also pushing off other markers of a normal life like home-ownership or even retirement. That’s right: the student debt crisis doesn’t just affect students themselves. In many cases, it affects parents, who took out Parent PLUS loans (federal loans that parents take out for their child’s college tuition) in order to help their kids get ahead. And just as their kids are likely struggling to pay off trillions in student debt, parents are, too. In fact, in order to pay off the loans they took out as an investment in their kid’s education, a growing number of parents are borrowing from their retirement funds.

There is approximately $1.7 trillion of educational debt in the United States and while most of that belongs to millennials and Gen Zers who took out loans, a healthy portion of it also falls on the shoulders of parents. Parent PLUS loans are federal loans that parents can receive for their kid’s tuition and there is currently $100 billion of debt from Parent PLUS loans. There are currently 3.6 million parents who have taken out PLUS loans, with the average loan being more than $28,000. That is no small amount of cash.

While these loans are similar to a typical direct federal student loan, the key difference is higher interest rates (at an average of a little over 6 percent). And if parents are unable to pay off these loans, they accrue interest, putting parents in a deeper financial hole they may never be able to completely escape from.

Though student loan payments are currently paused through May 1, a Nerd Wallet survey found that 34 percent of parent PLUS student loan borrowers do not feel confident that they would be able to make payments if they resume. Reporting from NBC News has found that a growing number of parents are borrowing from their retirement savings — and therefore imperiling their ability to retire — just to pay down their child’s student debt. Additionally, per the survey, 28 percent are counting on student loan forgiveness to erase a large portion of their debt, which is, unfortunately, looking increasingly unlikely under the Biden administration.

And there’s no shortage of parents who took out a PLUS loan who are now experiencing regret. Many parents wish they had taken out a smaller loan, while others wish they had better planned their kid’s educational path to not require such hefty loans. And some are expecting their children to take over their loans whenever payments do resume.

“I don’t regret taking them, but I regret not reading closely,” Robert Pemberton, a father of two who currently has an outstanding debt of $265,000, told Insider about his Parent PLUS loans. “I was going to do whatever was necessary to get my kids through and get them started in their careers.”

The economic reality for millions of parents across the country is grim and to cope with this present debt, many have begun borrowing from their future. As parents reach into their retirement and pension funds to stave off the avalanche of student loan debt they’ve taken on, they are now being forced to hold off on their retirement timelines.

It has gotten so dire that more than a quarter of parent PLUS student loan borrowers surveyed said they expect to either delay their retirement or are unsure if they’ll be able to retire at all. And as the cost of tuition continues to increase, more and more parents may find themselves lacking agency in their own financial future.

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