There is significant and increasing pressure on parents and even grandparents to try to help their children and grandchildren deal with the rising cost of financing their college education. Oftentimes, clients are torn between helping their children or grandchildren, or funding their own retirement programs, such as IRAs, Roth IRAs, and 401(k)s to the full extent.
According to the Consumer Financial Protection Bureau, the number of U.S. residents, who are over age 60 with student loan debt has risen from 700,000 in 2005, to 2.8M in 2015, a four-fold increase in 10 years!
We are finding that some parents and grandparents are contending with this student loan debt while living on limited retirement income sources. In turn, this is limiting their ability to do the things that they wanted to do in retirement. We strongly advocate that clients should never go into a significant level of debt to fund a student's college education. We believe that students need to take some accountability and responsibility towards their own education, as most of us did when we were students.
A recent study by the American Sociological Review showed that college students get higher grades when their parents do not completely pay for their education. Starting the budgeting and planning process early helps to open up many options of paying for these ever-increasing expenses. If you have questions, as you try to help your children or grandchildren attain their higher education goals, or if you wonder how these decisions may impact your own financial freedom in retirement, please have a conversation with us.
We would love to help you work through these issues long before they cause problems in the future. At Impel Wealth Management, our goal is to help our clients, as well as their children or grandchildren, make good decisions to Move Life Forward in a positive and constructive way.