To My Girlfriends

"Student Loan Crisis Busts Retirement Savings"  This is the headline of the following article I found on CNBC :

Parents who borrow money to pay for their children's college education are exacerbating a growing student loan crisis.

Jupiterimages | Getty Images Many parents who co-signed loans or borrowed money on their own for their children's education now face the loss of their retirement nest eggs, homes and other assets.

Student loan debt amassed by parents is growing faster than loans taken out by the student.

Parents' loan debt has more than doubled over the last decade — exceeding $100 billion dollars or 10 percent of all outstanding student loan debt, according to the independent research firm FinAid.org.

"Parents of every income level are increasingly borrowing for their children's college education. It doesn't matter whether the parents are low income, middle income or upper income. There's been dramatic growth in the percentages of parents who've been borrowing," says FinAid.org founder and publisher Mark Kantrowitz.

Many parents who co-signed loans or borrowed money on their own for their children's education now face the loss of their retirement nest eggs, homes and other assets. As student loan debt has topped U.S. credit card debt, "America faces the very real possibility of another major threat on par with the devastating home mortgage crisis," according to a new study by the National Association of Consumer Bankruptcy Attorneys (NACBA).

Piling up student loans in middle age is "troublesome", says NACBA vice president John Rao, an attorney with the National Consumer Law Center. "Parents who take out loans for children or co-sign loans will find those loans more difficult to pay as they stop working and their incomes decline."

But, parents' need to borrow has grown as their savings has declined and plummeting home values have made it difficult for many households to tap what was once a common financial resource — the equity in their homes.

Parents have an average of about $34,000 in student loans and that figure rises to $50,000, including interest, over a standard 10-year loan repayment period. Interest rates on the most common parental loan — the federal Parent "PLUS" loan — is fixed at almost 8 percent. So the return on parents' investments needs to average at least 8 percent just to break even.　

The fixed-rate PLUS loan is often a better choice for families than private student loans, whose rates may vary. But the need to borrow private or PLUS is often a sign of over borrowing, Kantrowitz says.

"Parents should borrow no more than they can afford to pay in 10 years because they have to worry about their own retirement. By the time they retire, they should have no debt remaining since they will have no income to repay that debt."

THIS is precisely what I was talking about in a previous post.  I can NOT fathom taking out loans in MY name for my child. Seriously?  Are you kidding me?  Clearly not since so many parents are doing just that.  Yes, I love my children and yes, I want what is best for them, but I have given and still give them the tools they need to get scholarships or jobs to pay for college.  

What about the outrageous tuition at different schools?  What about the debt they will have when they graduate?  Well, first, if they want to attend such an institution then they need to find a way to pay for it.  There is ROTC or straight up academic or athletic scholarships.  Their debt is not our problem, in my and my husband's opinion.  They are adults.  Classifying them as anything other than adults is not accurate.  18 is the age of majority.  They can vote and they can enlist in the military.  I don't have access to your medical records anymore.  You are an adult.  Done.

And here is some irony with age....the FAFSA (Free Application for Federal Student Aid) form still requires the parent's income.  Why?  I am not sure how my adult child is still considered my responsibility.  No, I am not ignorant, I know, they are still my dependent IF I claim them on my taxes, but when I no longer do claim them then we shouldn't count on their FAFSA.  Not so. Even if we don't claim, the parental income is still needed.  I am sooooo unhappy about that.  I don't get it.  Maybe someone smarter than me can explain this.  

Let me give you an example....our oldest works a full-time job.  She lives home (not rent free mind you, we aren't that nice lol).  We have NOT claimed her as a dependent for 2 years now.  Doesn't matter.  When she applied for financial aid they still asked for our information. We refused.  They made her sign some form and she didn't qualify for anything.  She was penalized.  Nice, huh?  She is 22!!  How is she still our responsibility financially???  I don't get!!