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Student Loan Debt: More Parents Not Helping

    June 26, 2014
    Lacy Langley
    Comments are off for this post.

Student Loan Debt is becoming more and more the responsibility of the student, and less that of the parents. According to a Discover student loan survey, only 52% of parents said they were going to help their kids pay for student loans. That’s down from 58% last year.

This news comes as student loan debt is skyrocketing and one in 10 student loans across the nation are at least 90 days delinquent.

Danny Ray, the president of Discover Student Loans, doesn’t know why more parents are refusing to help their kids with their student loans. Could they be more confident in their child’s ability to pay them back or could they be just plain ready to say “no” and let kids learn to deal with student loan debt?

Outstanding student-loan debt hit $1.08 trillion, up $114 billion over the course of 2013.

For those who cannot pay student loan debt, there are many repayment options that you could exercise before you go into default. Options such as the consolidation or income-based options are readily available. Also, Obama has recently extended the Pay As You Earn initiative that could benefit many students that are exiting college and trying to find steady work.

Pay As You Earn helps those with mounting student loan debt, as it caps your payment at 10% of your income.

If you lose your job or have a major life change that effects your ability to pay, deferment or forbearance could help by hold off payments for a period of time until you can get back on your feet.

However, forbearance should only be a last resort to keep your student loan debt from going into default according to Abby Harper, spokesperson for Upromise by Sallie Mae. Forbearance allows you to stop your payments for a time, but interest continues to build up.

As parents, if you do plan to help your kids pay back their student loans, it’s a good idea to sit down with them and write up exactly what you expect to do and exactly what is expected of your student.

If you don’t, you could at least be sure they know all of their options so that student loan debt doesn’t ruin their bright future!

Image via YouTube


  • smithsson

    ….not entirely surprising:
    1) A lot of Americans are undisciplined in their own finances. It’s a good part of why the Housing Bubble occurred. You can’t give 100% of the blame on banks some fool is taking out way more than they can afford. [there’s a great S&L skit on that topic!] So parents who can’t afford what they have are now raising a generation of naive students and telling them to get into more debt.
    2) Colleges are hilariously overpriced for the value they provide. The overhead and admin side are paying themselves way too much vs money towards research and professor salaries. [recent news of 6 professors offering to split salary of one admin 6 ways to do the same job better, when the said admin left their position and a job posting was posted.]
    3) Some professors are making a bad name for every professor letting their personal beliefs get in the way of teaching. [whether we’re talking global warming, feminism, religious beliefs or the lack of religious beliefs, social justice, or any other secondary topics to essential teachings that helps produce a functional generation of innovators and workers.]
    4) high school counselors, parents, and mentors are still not guiding students to take majors in degrees that has the highest ROI versus degrees that are worthless.
    5) not surprisingly, unethical and amoral banks and lending institutions are now offering new packaged “loans” to a new generation of unemployed naive students and converting them to slaves of debt.
    6) Government is not the solution.

  • bobincinti

    I am trying to help my daughter get out of college debt free. One of the issues that we are having is that she cannot make up her mind as to what school she attends. I am only giving her x number of dollars per year and I am paying cash for it. I am scrimping and saving and have even worked some odd jobs for this. She is also working and contributing.

    However part of the problem is that the Universities are offering worthless degrees. What kind of job can a Woman’s Studies or a Dance major get? A barrista at Starbucks? Why aren’t our colleges training the youth for careers where they can get jobs? If you are stupid enough to rack up $150,000 in debt, I don’t feel sorry for you.

    • Jeebus

      You need to tell your daughter to get a J-O-B.

    • Ryan

      Because like or not, colleges are a business. If they have a demand for people that say they want to get a “Dance” degree, then they’ll make a degree so they can charge to a ton of money to give you a piece of paper that confirms that you know a bunch of info about dancing. Colleges are means of higher education, if you choose to get that higher education in something that doesn’t turn out to be worthwhile, that’s your own fault, not the college.

      It’s YOUR responsibility to seek out a higher education to build yourself the life that you want. If you (or your daughter) chooses poorly, that’s the fault of your daughter or the parents that are responsible for guiding them to make proper choices.

      While I agree that college tuition can be a little ridiculous, we’re getting too quick to blame the colleges and want the government to regulate them. No one forced anyone to go to college, it’s still the individuals choice in the end. What we could do better as a society is to better educate our youth and do a better job as parents to guide them in the direction that is reasonable. While it’s great to shoot for your dreams, we have to stress very hard that it can (and usually will) come with great consequence if it doesn’t work out.

      Too many people want to play the victim and not take responsibility for ourselves. It’s called growing up. The government can’t fix all your problems. If you just now realize that liberal arts degree wasn’t such a good idea and you spent too much time doing keg stands, well that’s called real life consequences. Congratulations, you’re in the real world now.

  • Jake

    hey Lacy, your parents not paying for student loan debt article reminded me of a popular post I came across on our site Wall Street Oasis (one of the largest online finance communities with over 4 million page views/month).

    Our post supports what you’ve written, but from the perspective of an investment banker instead.

    I thought you’d find the article and some of the follow-up comments interesting.

    If you’d like me to forward it your way let me know and I’ll gladly send it over.

    -Jake
    Wall Street Oasis

  • prioritytaxgroup

    The study includes only people aged 20 to 40 currently paying against their student loan debt . I think it’s a fair assumption that the majority of the people in this group are not incurring additional student loan debt (ie, they took out all the student loans they’ll ever take out before the age of 20). As I understand the data, the paper defines “student debt” here as the balance of debt currently held, not total debt incurred. That’s (one of the reasons) why it seems low — on average, a person in this study has been paying off their debt for 10 years already, and the current debt reported reflects that