Student Loans Burdening Parents

When I attended college, student loans were of great help. I took out student loans, not because my parents couldn't pay, but to relieve the financial burden for my parents.  If I recall correctly, which is not guaranteed :-),  I took out the maximum Federal guaranteed student loan each semester in my sophomore through senior years.   I signed for the loan myself; my parents didn't need to co-sign.  For reference, each semester's loan was about 5% of my starting salary as an engineer and my total loan was about 40% of my starting salary.  Even at these amounts, I felt the burden of the debt for 10 years.

I've already read about how students are graduating with loans that two to three times their starting salary.  In addition, student loans may now be more of a burden than assistance to parents according to the article, Child's Education, but Parents' Crushing Loans which provides details on the plight of two students' parents.  Essentially, the parents co-signed their child's loans.  Despite their own poor financial situation, the parents are now responsible for the loans since their child missed payments.  Sometimes this results in reduction of tax refunds or Social Security benefits to cover loan payments.

Some lessons for me:  1) Don't co-sign a child's loan; 2) Save for college.   Some lessons for my daughter:  1) Borrow less than 30% of her expected starting salary; 2) Major in a field with a high starting salary.

For more on Crossing Generations, check back every Thursday for a new segment.

This is not financial or education advice. Please consult a professional advisor.

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