Student debt in this group is growing at an alarming rate – Motley's Fool

Student debt is a growing problem that does not seem to slow down. According to estimates, 45 million Americans are willing to pay student loans and up to $ 1.56 trillion.

Now, when we think of people with student debt, we tend to fall into the millennial generation – those who have recently graduated from high school and are known to be too liberal in terms of borrowing. And technically, in dollars, the biggest increase in student debt is among borrowers aged 30 to 39 – a mix of Generation Y and Generation X, if you keep the score – who now, collectively, owe $ 460 billion in university loans, according to a new guardian report.

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But as a percentage, the age group that has experienced the largest increase in student debt is the baby boomers, aged 60 to 69 years. These people have seen an enormous 72% increase in university loans, which is surprising given the a lot college years.

So what gives? These are essentially baby boomers who go into debt for their education, not for themselves, but to finance the education of their children.

And it's not just a debt. Boomers have always tapped their retirement savings, exhausted their emergency funds, and liquidated their assets to avoid the burden of student loans on their children. In doing so, however, many have jeopardized their long-term financial security. More than 50% of baby boomers say that college debt prevents them from achieving their financial goals of maintaining a decent lifestyle in retirement.

If you are in your forties, fifties or sixties and are considering a college debt on behalf of your children, think twice. It could be a decision that you will deeply regret when you are older.

Do not put your retirement at risk

The main reason you should not go into debt to help your children go to university is: your kids have all their life in front of them to earn money and pay their university fees while saver for their retirement and others. important questions. On the other hand, you may only have about ten years to do the same, and if you are over 60, you will have less time until you retire. . That's why it's dangerous to go into debt later in life, because the money that will be used to pay back these loans could be used to strengthen your budget and ensure you have enough savings to live at the end of your life. your career.

In addition, if you take out a student debt later in life, there is a good chance that it will be postponed to retirement, thus monopolizing a large part of your limited income. And this could create a very stressful financial situation – a situation you do not deserve.

Not only that, but if the money is tight in retirement and you end up falling behind on your student loan payments, you could also end up having your social security benefits foreclosed. Once this happens, your finances could fall permanently.

A better bet? Avoid debts at all costs later in life, including that of the educational variety. If you missed the boat to save for your kids' college, do not take out loans to compensate. You may be avoiding your children going down this road, but it will not help them if they are forced to pay for your eldest living expenses because you can not afford to do it yourself. -even.

At the same time, do not hesitate to encourage your children to minimize their tuition fees. By choosing a four-year public school in a public institution rather than a private college, you could save $ 100,000 on your total tuition. This is an easy way for your kids to avoid falling into the trap, so many student loan borrowers are falling today.