College loans have been a hot topic for several years. It’s not hard to see why. With the cost of college continuing to skyrocket, families are feeling the stress of how to pay for college. It is a source of anxiety felt by many graduates as they seemingly owe a small mortgage before they have begun their careers.
It’s not just students who are acquiring the debt. Parent PLUS loans are growing at an alarming rate. The maximum in federal direct loans a student can borrow is up to $12,500 per year and up to $57,500 total for undergraduate school as of 2024. Many schools cost much more than that plus the cost of housing, books, supplies, food, and more. Parents without a higher education plan for their children have been signing up for Parent PLUS loans to cover the difference. As a result, Parent PLUS loans are the fastest growing loan type used by borrowers.
Unfortunately, Parent PLUS loans have the fewest borrower assistance programs and are likely to be around well into retirement. Most parents are older today than they were in the 1980’s and have less time to adjust their retirement plans from an unexpected expense entering or during retirement.
Helping your children prepare for higher education costs is the best way to prevent this scenario from happening to you. Even if you are not planning on helping them pay for college, let them know early. You will give them time to adjust their plans knowing that they are responsible for what happens after high school. Otherwise, they will begin their young adult lives without a plan. The decisions they make without a plan, not knowing the repercussions of those decisions, could become a heavy burden for the rest of their lives.
