Parents' Student Loans Hurt Their Children

Apr 17, 2018
Student loans, Income-share agreements

Student Loans

As student loan debt increases, it is becoming a generational problem. The average graduate with a bachelor’s degree takes 21 years to pay off their student loans. For graduates starting their families shortly after graduation, this often means they are paying back their own debt throughout their children’s’ lives.

In a recent survey, 20% of students say their parents are still paying back their own student loans. In a survey of Generation Z students, more than half expect the debt of their parents to make it more difficult for them to pay for college. But how do parents’ student loans actually impact their children? Here are the three major ways:

1. When calculating the expected family contribution for new students, the government rarely considers parents’ student loans. Thus, parents are expected to contribute money they don’t have to their children’s education, and families must find a way to fill this gap.

2. If parents fail to pay back their own loans on time (which is increasingly common), it can prevent them from taking out Parent PLUS Loans for their children. When parents cannot take out federal loans for their children, families must turn to other methods, such as predatory private loans.

3. Even if parents are able to take out Parent PLUS Loans in addition to their own student loans, this puts them in the difficult position of paying back even larger amounts of debt. For parents struggling to pay back their own loans, adding loans for their children can lead to increased risk of default.

As parents lose the ability to help their children pay for college, the student debt crisis will only get worse. Thus, it is important that we make changes to our system of educational finance before it becomes even more of a vicious cycle for American families.

For students that cannot receive traditional student loans or get financial help from their parents, there are other options. One solution? Income share agreements. Learn more about the MentorWorks ISA program here.

About the Author

Sabrina Kite

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