The Impact of Student Loan Debt on Parents


The Impact of Student Loan Debt on Parents

Dori Zinn

October 24, 2019

The Impact of Student Loan Debt on Parents

Student loan debt is swallowing Americans whole. According to the Federal Reserve, student loan debt has now amounted to $1.6 trillion, as of June 2019. It’s causing Millennials to put off buying a home, get married, and expand families. But they aren’t the only ones suffering from student loan debt.

A recent Financial Debt Relief survey found that 89 percent of parents think $1.6 trillion of student loan debt has put us into a financial crisis. Student loan debt is proving to weigh heavily on parents as well. As parents struggle to help their grown children pay back their student loans, the parental impact of student loans exists.

The financial impact parents feel from student loans

If parents are helping their grown children pay for their student loans, it could mean they’re making sacrifices elsewhere.

More than 40 percent of respondents admit that the cost of their child’s education has hurt their retirement savings. Another 31 percent believe they can’t retire when they thought they would due to the cost of college. Other sacrifices include:

  • Going on vacation: 42 percent

  • Buying a house: 12 percent

  • Changing jobs or careers: 10 percent

  • Putting off the retirement of partner: 10 percent

  • Moving out of state: 8 percent

While retirement and other ventures may take a back seat, other financial struggles have also come up. Many parents aren’t only putting off their own retirement, they’re sacrificing their emergency savings as well.

One-third of parents say they can’t save money due to mounting college costs. Another 22 percent are carrying credit card debt because of their child’s education. Other day-to-day financial habits are also affected, including:

  • Can’t go on vacation: 32 percent

  • Can’t buy a car: 18 percent

  • Can’t pay other debt, like credit cards: 17 percent

  • Missed bill payments: 13 percent

  • Can’t pay rent: 3 percent

While major expenses are taking a hit, the cost of college is weighing on parents’ credit. According to the survey, 40 percent of respondents believe their child’s college education costs have changed their retirement age. And 23 percent say it’s harmed their credit score.

Along with that, 10 percent of parents say their child’s cost of college has hurt their chances of getting an apartment or house. This is in line with parents who can’t pay other debt, miss bills, and can’t make house payments — all impacting your credit score. Credit scores are a determining factor in getting a home loan and parents find it harder to manage their own finances and their child’s college debt.

The emotional impact parents feel from student loans

As money woes are running rampant, there’s another impact that’s not as obvious: the emotional toll. The majority of respondents believe the current state of student loan debt has put us in a financial crisis. And the crisis has infiltrated their homes, too.

Thirty-seven percent of respondents say their child’s college costs have caused them to feel overwhelmed about their own financial situation. And 20 percent say it’s caused them to lose sleep at night. Another 20 percent admit that the burden has contributed to mental health issues, like anxiety and depression. Other emotional impacts include:

  • A strain on family relationships: 14 percent

  • A strain on personal relationships: 11 percent

  • Contributed to physical health issues: 9 percent

Stress from lack of money isn’t new. A study from Northwestern Mutual found that people’s definition of success equates to spending time with family and being healthy. Also on the list is being financially prepared for the future. But more than one-third — 34 percent — of people’s income goes towards paying off debt. And 35 percent feel guilty about the debt they’re carrying. About 45 percent of Americans say debt makes them feel anxious at least on a monthly basis and 20 percent admit their debt makes them physically ill at least once a month.

How would parents change the burden?

As student loan debt has shown to hurt parents as much as their grown children, parents are looking for ways to lessen the burden it’s put on their families. More than half — 52 percent — support expanding public service loan forgiveness (PSLF).

The program is for workers of government agencies, nonprofits, and teachers. It forgives the remaining balance in public student loans after:

  • 120 qualifying payments are made, and

  • While you’re working for a qualifying employer.

Aside from expanding PSLF, half of the parent respondents support tax breaks for companies that offer student loan repayment programs for their workers.

And there’s support for up-and-coming students as well. Another 42 percent would support free or subsidized tuition for low-income households. Other relief ideas include:

  • Making student loans dischargeable in bankruptcy: 28 percent

  • Getting the government out of student loans entirely: 26 percent

Another way younger students can lower the student loan debt burden is to look at maximizing free money options. Applying for grants and scholarships while in high school means there’s less money they will need to take out in student loans.

Even as parents like the idea of lowering the student loan debt burden, a lot of parents admit that they wouldn’t ask their children to do anything differently (48 percent). Only 39 percent say they would’ve asked their children to apply for more scholarships. Most admit they’d take on the debt again for their children.


Dori Zinn has been covering personal finance for nearly a decade. Her writing has appeared in Wirecutter, Quartz, Bankrate, Credit Karma, Huffington Post, and more. She previously worked as a staff writer at Student Loan Hero.