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Student loans sink Mom and Dad

Some are still paying off their college loans, but a growing number of parents are saddled with student loans they took out to pay their kids' tuition.

By MSN Money Partner Jul 19, 2012 4:03PM

This post comes from AnnaMaria Andriotis at partner site SmartMoney.


SmartMoney on MSN MoneyA growing number of middle-aged Americans are struggling with student loan debt -- not all of it from their college days.


Image: Portrait of young man in graduation gown with father on campus (© Thomas Barwick/Digital Vision/Getty Images)While borrowers over 40 account for about a third of the nation's $900 billion in student debt, they appear to be struggling with their loan payments more than other age groups, according to a report in The Wall Street Journal


For example, the delinquency rate -- the percentage of debt on which a payment has not been made for 90 days -- for Americans aged 40 to 49 was 11.9% in March, compared with 8.7% for borrowers of all ages.


Experts say many of those borrowers over 40 are still paying off balances from their college years. But a growing number of parents are saddled with student loans they took out to pay tuition for their kids. Roughly 17% of parents whose children graduated from college this past spring held federal Parent PLUS loans. That's up from about 10% a decade prior, and less than 6% in 1993, according to (Post continues below.)

The average balance on these loans: nearly $34,000, up 123% from a decade ago.


Meanwhile, more private lenders are demanding parent co-signers on their student loans. Because most students don't have a credit history, lenders say they turn to their parents' credit to determine whether to approve them, and at what terms. Both the parent's and the student's name appear on the loan, and the lender expects payment from either party.


Missed payments will affect both borrowers' credit scores. And if the student can't pay, the parent is on the hook for the payments.

Since the financial downturn, more than 90% of college loans from private lenders have co-signers, says Mark Kantrowitz, the publisher of, which tracks financial aid and student loans. That's up from roughly 50% prior to 2008.


The ballooning of student loan debt for older Americans highlights a key downside to student loans, say consumer advocates: There's no way out. Unlike all consumer loans, federal and private student loans cannot be wiped out after bankruptcy.


More on SmartMoney and MSN Money:

Jul 20, 2012 10:51AM
My son just stopped making payments on his student loan. He had a decent income but for some reason felt no responsibility to pay it off, Really pissed me off as I did not raise him to be a deadbeat. I was not on the hook for the loan but decided to pay it off. Money was borrowed and needed to be repaid. Still love the kid but was really disappointed with him. Sat him down after taking care of the matter and told him, "that was and will be your inheritance". Left him stunned when I told him our will has been revised to leave any and all that remains when we leave this world to charity. I hope this wakes him up!!
Jul 20, 2012 6:19AM
paid off my student loans -150k in ten years. never bought "new" cars and paid for them cash. bought a small home that i could afford and lived way below my means. 
Jul 20, 2012 9:19AM
Some of you are saying student loans are a scam or that the gov. needs to do something about it like relieve you of your dept. WTF are you talking about. If you can't afford the loan then don't get it. And if your kid can't get a loan on his own, then maybe he should get a job for now, save some money and then go to college. We really are living in a society where everyone wants to blame someone else for their problems and stupid decisions. I couldn't afford college either so I got a job and worked full time while in school at the same time living on my own. Was it easy??? Hell know. I ate ham sandwiches and canned meat and noodles but I did it. And eventually I quallified for loans "without" my parents help and got them. Now I didn't go crazy and borrow more than I could ever pay back but I did what I needed to do and I made it. So if I can do it along with millions of other people who did it the smart way, why should the "gov" bail you out or cut you a break just because you were stupid or your kid was lazy?
Jul 20, 2012 9:00AM
What is going to eventually happen is - no one can afford a College or University Education due to the rising costs of such education.  Student Loans will be extremely difficult to get due to interest rates or not qualifying for the loans (just like Mortgages).  Colleges and Universities will either shut their doors eventually or they will have to lower their rates for people!  The bad part - you spend $50,000 (maybe more, maybe less) for a 4 year degree or higher.  The student graduates and can't find a job.  Or, a potential employer wishes to hire these new graduates for substandard wages.  So, WTH?  Is paying $50,000 (more or less) truly worth it now?  Maybe our 12 year education system should start teaching better so you don't have to go to college and spend a fortune and get weighed down with huge student loan debts?  Or, more trade schools need to appear that specializes in an industry where you don't have to take all those undeeded hours of classes!  It is going to be a lose-lose situation.
Jul 21, 2012 11:50PM

We're told we have to save money for a house... then save money to put our kids through college... then save money to take care of our parents... and then, on top of it all, we're suppose to save for our own retirement. 


AND the while we're doing this, we're supposed to be taking care of all the other expenses of life too-- utilities, insurances, vehicles to drive, repairs on the house, clothing, food, furniture, appliances, medical care, dental and eye care, etc., etc., etc.       Give me a break! How are we supposed to do all this, especially those of us living on a modest income?  For most of us, doing all this is impossible.  


You know who came up with all this?  Banks, colleges, and nursing homes.   

Jul 20, 2012 12:23PM

Starting from the first day of high school, Mom and Dad should have been both consistent and persistent with how the college thing was going to go down:  You will do all the work necessary to apply for as many sholarships or grants you can apply for, you will work while you go to college, to expect financial help from us, on the rare occasion we chose to help, you will have a B average or better or forget it.  If these simple rules would have been set in advance and understood by all, then the choice of college, field of study, how much one would be willing to go into debt would have worked itself out with no one, after graduation, being insanely in debt. 

Also, colleges and universities are raping America.

Jul 20, 2012 5:34AM

Here is another reason why we are in such financial trouble.  Great example for your kids!  If you can't afford their education at the front end, go to a state school and have them get a job and pay for it themselves!!!

Jul 20, 2012 3:38PM
My daughter graduated in 2006 and I still owe 14,000 on the loan I took out at 8%. because I was considered middle class, she received very little financial aid. The interest is non-tax deductible. There is no forgiveness. How can I do my part to drive the economy by spending when I carry debt like this? Who is going to bail me out? The government loans banks money at 0%. Why?  Reduce my interest rate to 0% too and then maybe I can put some spending back into the economy. The rich do not need any more tax breaks. The middle class is vanishing. I will never shop at Walmart and I can not afford Saks Fifth Avenue so if i don't start shopping at sears and JC Penny, there will be no place for middle class to shop because their will be no middle class. It will be 99% Walmart and 1% Tiffany's. Look at the retail figures and the tax structure and you will see what I am talking about.
It's pretty simple. Don't borrow what you can't pay back.

Common sense seems to be a dying thing these days.

And no i'm not a 1%, I work two jobs to pay my bills and support my family. I stick to sentence #1 and in my lifetime it has served me well so far.

Jul 19, 2012 9:07PM

Dont blame those that take out loans to get a better life--with more jobs being shipped overseas it is increasingly either work in some service industry job barely making it or take out tons of $ to try and make a stable life. I just graduated law school and got a decent job. Cost me quite a bit despite working full time during undergraduate and clerking throughout law school. I will be living about the same as before starting down this path but at least there will be better benifits and opportunity for growth someday. The secondary education institutions in this counrty are totally out of control. They are to blame. Our law school raised tuition and let a record number of students in two years ago--the worst year of the recession. And the government paid big time in student aid to send students there.  Ethical?

Jul 20, 2012 8:51AM
I love how condescending some people can be. Until you've walked in my shoes, you have no idea about my situation or how it started. You have colleges telling students that they cannot get any help until their parents first apply for a parent plus loan. And the government is all too quick to approve those parents plus loans, even in situations where they shouldn't be approved. We were told that if we didn't apply for parents plus loans, then my son could not obtain loans, which I now know is a load of BS. The way interest is computed on these loans is outrageous. My husband is working part-time (cannot find a full-time job, but keeps looking for one), so I'm having to defer the payments at the moment, which only increases the amount of interest. It's a vicious cycle.
Jul 21, 2012 6:02PM
The price paid for so called "higher education" is simply BS.  There is no reason that taking four classes at a college should cost 20k and up. It greed by the schools plain and simple.
Jul 19, 2012 8:50PM
 I am one of those parents who is struggling to pay my own student loans and now my son has some that I also am responsible for.  This is the first generation dealing with student loan debt that is so huge that we are paying for our kids at the same time.  I shutter to think what will happen to his kids generation.  He is being smart and paying back the one year of loans he has and deciding to pay for college one class at a time with cash.  None of us can afford any more debt right now.
Jul 20, 2012 11:32AM
I see these "average" loan amounts, and all I can think is BIG DEAL!!!  That is the price of a car, and no one thinks buying a car is scary.  I think the amounts are actually much higher.  I have a niece with almost 90k and a niece-in-law with over 100k.  My recommendation to all future college students, do as much in community college as possible, as cheaply as possible.
Jul 20, 2012 3:02PM
Our kids (7th & 8th grades) are considering college. I have already told them they will work through college and will not take out any student loans. I have recommended trade schools and or military service as alternatives.

Jul 20, 2012 11:08AM
A college education is an investment.  All investment involves risk.  No college guarantees a job upon graduation or any other time in the future. 
Jul 21, 2012 8:29PM
I have a brother and sister that both went to college.  I am a high school drop out and I make more money than both of them put to gether.  Hard work and knowing the value of money is what gets you ahead, not education.
Jul 20, 2012 1:56PM
Students should finance college on thier own. They want to go to some fancy four year university, they should take what classes that they can at the community college level to save some money and then transfer later. Maybe it takes six years to do the usual four years because the class load needs to be lighter to allow time for working in order to pay for the classes, that's better than having mommy and daddy always wiping your butt with their cash.
Jul 20, 2012 12:31PM

A father there paying a loan i signed for so my daughter could finish college.  The agreeement was she would pay it when she finished school.  Guess what, school is done and no job so i am on the hook for the payment.  My sugguestion is to any parent, dont sign for a student loan.  I have bills of my own to pay and took at $50,000.00 pay cut. Thats life

Jul 22, 2012 6:38AM
The student loan "program" is nothing but a big racket!  Hardhearted as it sounds to some people, if your children cannot afford to pay their own college expenses, and you don't have the means to save the money for it, don't sign for any loans. In the end you can lose everything you worked so hard for all your life. When your are sitting there up to your neck in the bills, no one is there to help you, believe me I've been there.  Some people take us for useful idiots, and then when the papers are signed, and we are making the payments on their education, forget us. Salliemae was very freewheeling in making loans, including for tutoring.  Everyone gets paid in advance, if the kids don't finish the courses and get the degree or whatever, you are still stuck with the burden of the payments. Now they are crying that people are defaulting on their loan payments, this is the mess they created being too liberal in their lending practices. Debt is slavery, plain and simple.
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