New research finds the average cumulative federal student loan debt that parents borrow goes beyond what students are taking out. Parents owe more than $32k for loans, while college graduates owe less than $30k.
The research reported that parent borrowing on PLUS loans is up 19.2 percent from $27,352 in 2011-12; and up 40 percent from $23,279 nearly 10 years ago.
At a time when parents should be building up their nest egg, instead their draining it to pay for the children's college tuition.
That's a big no-no.
This puts them at high risk for problems when they retire.
Wealth management advisor and tax attorney Rebecca Walser said parents have to understand their children have other ways to pay for college.
“Whereas, if a parent is making a choice to either go into debt, or potentially not to put money aside for their future and their retirement, there is no one who is going to step up and give them an alternative funding option,” said Walser.
She said of course, it's a parent's natural desire to help their children.
“However, if they had one dollar and they could only spend it in one place, either on their children’s college, or on their own future retirement, I would tell them every time, ‘they must pick their retirement, their future’,” said Walser.
She says the children can get a job, go into the military, go to school on the GI Bill or go into debt themselves to pay for college.
When student borrowing hits the limit, more parents start filling out the paperwork for private student loans or the federal Parent PLUS loans.