Student debt is growing problem that doesn't seem to slow down. As estimated 45 million Americans are on the hook for student loans, and at the tune of a collective $ 1.56 trillion.
Now, when we think about those debtors, we tend to land on millennials – those who graduated college fairly recently and have a reputation for being overly liberal on the borrowing front. among borrowers aged 30 to 39 – a mix of millennials and Gen Xers, if you're keeping score – – who now collectively, owe $ 460 billion in college loans, according to a new Guardian report
But on a percentage basis, the age group is the largest increase in student debt is baby boomers, aged 60 to 69. increase in college loans, which is surprising given that most are many, years out of college.
So what gives? It basically boils down to boomers who are taking on college debt, but for the sake of funding their children's education.
And it's not just debt. Boomers have consistently tapped their retirement savings, depreciating their emergency funds, and liquidated assets in an attempt to save their children the student loans. In doing so, however, many have put their long-term financial security at risk. Over 50% of baby boomers say college debt has impeded their ability to meet financial goals – namely, having a decent lifestyle in retirement.
If you're in your 40s, 50s, or 60s and are planning to rack up college debt on your children's behalf, think twice.
Don't put your retirement at risk
The main reason you should not load up on debt to help your kids go to college comes down to this: Your children have their entire lives ahead of them at earn money and pay down their college costs, all the while for retirement and other important matters. You, on the other hand, might only have a decade or so left to do the same, and if you're already in your 60s, you'll have less time than that until retirement kicks off. That's why taking a debt later in life is a dangerous move – because the money that goes to payments can be used to boost your nest and ensure that you have enough savings to live on when your career comes to a close.
Furthermore, if you take a student debt later in life, there is a good chance it will be carried with you in retirement, thereby monopolizing a large chunk of your limited income. And that might make a very stressful financial situation – one you don't deserve.
Not only that, but if money is tight in retirement and you end up falling behind on your student loan payments, you could also wind up having your Social Security benefits garnished. Once that happens, your finances might take a permanent tumble.
A better bet? Avoid debt at all costs later in life, including that of the educational variety. If you missed the boat for your kids' college, don't take out loans to compensate. You can save your kids from having to go that route, and they will not be able to pay their senior income because you can't afford to do so yourself.
At the same time Don't hesitate to keep your college costs to a minimum. Opting for a public four-year, in-state school about private college could shave $ 100,000 off their total tuition, and that's an easy way for your kids to avoid falling into the trap so many student loan borrowers succumb to today.