CFP Board Ambassador offers tips for to help families avoid heavy college debt loads
This year’s federal financial aid forms became available this month, opening the door for parents and students to take advantage of $120 billion worth of federal grants and low-interest loans.
Parents need to have a sober conversation about the importance of college, but so is graduating without crushing debt. Parents also need to set limits and avoid jeopardizing their own financial futures by tapping into retirement savings.
Parents who sacrifice their retirement savings for their children’s schooling may unintentionally be creating a financial burden for their own children later. If parents don’t have enough to retire, they may rely on their kids.
An increasing number of Americans are on the hook for the younger generations’ educations. Older Americans are the fastest growing segment of student loan borrowers, according to a Consumer Financial Protection Bureau report released this year. From 2005 to 2015, the number of Americans age 60 or older with one or more student loans quadrupled from about 700,000 to 2.8 million, and average debt load owed by an older borrower roughly doubled from $12,000 to $23,500. About three in four older borrowers used the loans to finance children’s or grandchildren’s college educations.
Parents should make sure they have taken care of “the big three,” before they turn to college funding. In the latest contribution to LetsMakeaPlan.org, CFP Board lists those priorities:
- Paying down consumer debt
- Establishing an emergency reserve fund
- Funding retirement
LetsMakeaPlan.org also offers links to help parents find free and low-cost college funding, such as by filing a Free Application for Federal Student Aid.
A CERTIFIED FINANCIAL PLANNER™ professional can help American families plan holistically for each generations’ financial needs.
ABOUT CFP BOARD
The mission of Certified Financial Planner Board of Standards, Inc. is to benefit the public by granting the CFP® certification and upholding it as the recognized standard of excellence for competent and ethical personal financial planning. The Board of Directors, in furthering CFP Board’s mission, acts on behalf of the public, CFP® professionals and other stakeholders. CFP Board owns the certification marks CFP®, Certified Financial Planner™, CFP® (with plaque design) and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements. CFP Board currently authorizes nearly 80,000 individuals to use these marks in the U.S.
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