Paying College Tuition is Forcing Parents into More Debt

According to Mark Kantrowitz, Savingforcollege.com’s publisher who analyzed government data, the debt for college graduates was $29,669 in 2016 (which is a 1% increase from 2012) and is projected to be at $29,812 for students graduating in 2018.

This is a small increase that needs explaining. And, as it turns out, parents are incurring more debt on behalf of their children.

Kantrowitz discovered that parents with college kids who obtained their bachelor’s degree and got a loan from the government’s Parent PLUS program were $32,596 in debt on average. The publisher reported that this represents a 19.2% increase from the data he saw from 2012.

According to Kantrowitz’s, the leveling off in debt is what has caused this increase. He says the rate at which dependent undergraduates are reaching their federal student loan limit, which is $31,000 to finish their course, is increasing due to the rising costs of college.

But the leveling off only explains some of the increase in parent lending, according to Rachel Fishman, a researcher at the think tank New America. This is because the number of borrowers has increased slightly over the years even though the amount parents are borrowing from the Parent PLUS program is increasing. She said the rising costs of college, especially public ones, coupled with the decline in state support is also partly to blame since this leaves students with fewer options to finance their education.

Kantrowitz says this is concerning because it puts parents at risk of retiring while owing the federal government thousands of dollars and having a limited number of ways of paying off the debt. This means parents will struggle to pay off the debt, seeing as how the loan only benefits their children and not them.