The student debt crisis is completely out of hand. It has become one of America’s biggest financial mistakes not only topping $1.3 trillion, but growing more than $2,000 every second. This is leaving millions with crippling debt that will follow them for decades to come. How did we get here?
We all have financial goals, and one of the most common goals for parents is paying for their son or daughter’s college education. Although admirable, when someone wants to help foot the bill you can’t, and shouldn’t if you are putting aside your own retirement plans. CollegeCalc, says the average public university in Michigan will cost between $8,000-$12,000 dollars per year which is just for tuition. That doesn’t include the high interest rates backed by the government or any of the extra costs that come with higher education.
If you are considering taking out a loan for a college degree, what kind of income will you make to pay it back? Are you going to step out of college and make a decent earning right away? Or will it take you a few years to earn that good paycheck? Maybe, when you finally do earn that bigger salary you will also need to pay for a wedding, kids, or a down payment on a house. Making uninformed financial decisions, while racking up hundreds of thousands of dollars in student loan debt is only going to generate more long-term problems.
Parents are also cosigning for loans which automatically puts them on the hook for their child’s poor financial decisions. It is almost as parents just send their kids off and decide to figure out how to pay for it after they get the bill. This is becoming detrimental to many people whether you are close to retirement or not. Rather than retiring when they should, parents are staying in the workforce longer to pay off that debt.
Make a plan and talk with your kids about being financially responsible and independent. That begins with understanding how much college actually costs, what their field of study will make from a salary, and how you both can contribute. The lesson here is; you should only help your kids if you can do so without setting aside your retirement or ability to retire.