Parents: Stop Taking On Student Loan Debt For Your Kids!

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As I was perusing the Interweb this week, I came across some survey results that outlined the extent to which parents are taking on student loans for their kids. Truth be told, these results floored me. I’m shocked at the number of parents who are willing to jeopardize their own financial future to pay an unnecessary debt for their children. I’m not sure why I’m shocked. I have a child of my own and I would do just about anything for her. The key phrase is just about. I’d like to think I wouldn’t take on student loans at the expense of my own retirement savings, but just like Anthony Perkins said in Psycho, “We all go a little mad sometimes.” And with that, let’s dive into this seemingly crazy parental crisis.

The Results Are In!


One of the worst things a parent can do for their financial future is to take on student loan debt for their children. Parents: Stop it!

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The results are in! Apparently, parents are taking on student loans for their children at an alarming rate, and to the detriment of their own retirement savings. Yeah, you read that right.

Snapshot of Survey Results

  • 28% of respondents admitted to taking money out of their retirement funds for student loan debt
  • 40% said that their children never help with payments and 20% said that their children sometimes help
  • 18% of parents regret taking out/co-signing loans for their child’s education
  • 56% of parents claimed they were not aware of repayment options such as PSLF, income-contingent repayment, cosigner release, etc.

See here for the full rundown of these results.

Related: You’re Not A Bad Parent If You Can’t Afford To Save For College

Results Analysis


Let’s analyze the results point by glorious point.


  • 28% of respondents are pulling money out of their retirement funds to pay student loan debt
    • Are you kidding me? Pulling money out of retirement savings to pay a debt for someone else (even if it is your child) is one of the most foolish things you can do with your money. You might as well wear a sign on your back that says, Kick Me! Really. Investing for retirement works best when you have time on your side. Taking distributions to pay a debt is lost opportunity that can never be replaced. Ever.
  • 40% of parents said their children don’t help with repayment and 20% said their children rarely help with repayment
    • Why doesn’t this surprise me? Oh, that’s why! I’m not surprised because, despite your children being young adults, they have probably been led to believe that their college education was not their responsibility. Uh huh. And let’s face it, from the day they’re born, if you give them an inch, they’ll take a mile. Student loan repayment also falls into this category. Let me guess, you’re also paying for their mobile phone and car insurance. And to that, I say, Stop It! Again!
  • 18% of parents regret taking out student loans/co-signing for their children
    • Seriously, this number should be much higher. But the fact that these parents are not yet at retirement age and are not experiencing the full effect of the financial decision, I guess doesn’t surprise me. If you’re a parent that is regretting it now, you will certainly regret it later on down the road when you’re experiencing a financial crunch after retirement.
  • 56% of parents claimed they were not aware of repayment options such as PSLF, income-contingent repayment, cosigner release, etc.
    • Ignorance is not always bliss. The majority of parents stuck in a student loan trap for their kids are obviously not fully aware that they do have options! One available option student loan refinancing. Check out LendEDU or Student Loan Hero – the online resources that allow you to take control of your student loans. The best part – They’re both FREE!

Related: How To Afford College? Don’t Be An Idiot. 

Parents: Engage Brain


father and daughter - student loan

We love her, but we won’t sacrifice our retirement savings for her college tuition.

If you happen to be one of those parents you need to Stop It! Your children can pay for their own college. A free higher education degree is not a birthright. And guess what! Your kids might actually do better in college if they’re responsible for some of it – or even ALL of it. Yes, I said ALL of it. Gasp. It can and does happen. There are children (AKA young ADULTS) out there that pay for the entirety of their college education and are better for it.

Now before anyone has an aneurysm, I understand that not all kids who have a full ride from mom and dad are wasting their time chugging beer and skipping class. But, I’d say the probability for such behavior definitely swings in that direction. It’s just like anything else, if you have skin in the game, you’re more likely to put effort into it and take it seriously. College is no different. So parents, please, stop thinking you’re a bad mommy or daddy if you don’t pay for college.

Related: The Great Debate: Picking A Major For Passion Or Money

Your Retirement vs. Your Kid’s Tuition


Listen, common sense and every single financial adviser out there will tell you that your kid has options when it comes to paying tuition. And the options range from working their way through school to borrowing the full tuition.

Unfortunately, there are few options when it comes to funding your retirement. You can certainly work your way through – if that’s how you choose to spend your golden years. And, that’s assuming you’re in good enough health to have that as an option. But make no mistake, there is NO option to borrow money to fund your retirement. Unless by borrow money, you intend to live off of the charity of your family and friends. I highly doubt that’s how you’ll want to be remembered when you check out of the world.

And The Winner Is…


This really does go without saying, but just in case you need to be beaten over the head, I’ll gladly oblige. DO NOT TAKE ON STUDENT LOAN DEBT OR REPAYMENT FOR YOUR CHILDREN AT THE DETRIMENT OF YOUR OWN RETIREMENT. Full stop.

I was in a position of either paying for college on my own or not going at all. I opted to pay for it on my own. Yes, it took me longer to get through my undergrad degree. Yes, I worked my butt off. And yes, I appreciated my education every step of the way. My husband was also in the same position. We both paid our tuition in full and graduated with honors. Yes, it was hard – but it was worth it. Read all about our journey here.

Related: How We Avoided Massive College Debt

A Message To The College Grad


Mad Money Cat - student loan

Mad Money Cat sacrifices her retirement savings for no one. #smartgirl

If you happen to be on the opposite end of the equation, and you’re the person having your parents pay for your student loans at the detriment of their own retirement savings, you need to step back and take a self-inventory. Trust me, as a parent, your mother and father want to do this for you more than anything. And they will do it despite the financial hardship they’re experiencing or will experience. And again, the hardship might not be apparent now, but it will be in a decade or two when they want to retire and don’t have enough in savings to fund such a timely venture.

So please, if you have the means to make your own student loan payments or at least a portion of them, please do so. If you’re having trouble making the payments, consider refinancing. Head over to LendEDU or Student Loan Hero to compare refinance rates. It only takes a few seconds and it’s FREE. Another tool to use to keep track of your money so that you’re in a better position to handle repayment is Personal Capital. Also FREE.

But whatever you do, don’t take advantage of your parents’ love and generosity. Be the responsible adult they raised and step up to the financial plate. Everyone will be better off for it.

So, what do you think? Have you taken on student loans for your kid? Or, are you a kid with parents paying your student loans? Leave a comment, I’d love to hear both sides of the coin!


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  • High Income Parents May 10, 2017, 11:58 pm

    This is crazy that parents are taking out their retirement dollars for student loans. I know for some loans, their kids won’t qualify for if they don’t have a cosigner. Then it’s a decision between delaying school to work (or fewer classes) or taking on debt.
    Taking the penalty to take out retirement money from an IRA or 401k is terrible though. I can’t believe a kid would let their parents do such a thing.
    Personal responsibility isn’t that popular among our college age kids and below now, so it doesn’t surprise me, unfortunately.
    Articles like this will hopefully reverse the trend. Thanks for writing this.

    Tom @ HIP

    • Mad Money Monster May 11, 2017, 7:41 pm

      Thanks! I certainly hope this topic gets more attention in the coming years. It is absolutely absurd for parents to do this if they can’t afford it.

  • Single Income Life May 8, 2017, 2:55 pm

    Great post! Growing up, it was clear to me that one of my parents’ primary goals in life was to put their children through school. But by the time my siblings and I hit junior/senior year in high school, it was clear that my parents wouldn’t be able to foot the bill for our entire undergrad degrees. So they told us that they would pay for what they could (which ended up being a significant portion of it), and we would have to get scholarships and loans for the rest. Under no circumstances would they be taking loans on themselves to pay for school. Their approach really set the tone for me in my adult life. It let me know that our life goals are important, but not at the expense of excessive debt. Granted it took me a long time to learn that lesson, but I avoid debt like the plague now and have been better for it. I am parent myself now and have realized that the best lessons in personal finance are learned at home. Looking back, I don’t know if my parents really couldn’t “afford” to pay for all of our schooling. I do know that they paid off their mortgage shortly after their youngest graduated college. You know, life goals 🙂

    • Mad Money Monster May 8, 2017, 5:27 pm

      Sounds like your parents are pretty awesome people. They gave you a great gift! Congrats on paying that knowledge forward to your own children. They will no doubt be better off for it!

  • Kat May 8, 2017, 2:15 pm

    My folks said they would pay for my FIRST year of college, IF I EARNED significant scholarships. I did, and they did, and I paid for the rest (by working during school about 30 hours a week, and full time during the summer). I also continued to get scholarships which helped. I incurred a bit of CC debt (about $1k) by the end but had a job lined up before I graduated. Whew!

    • Mad Money Monster May 8, 2017, 5:24 pm

      That’s an awesome success story. Congrats on graduating without loans and only $1k in cc debt! You’re definitely in the minority.

  • Steve D Poling May 8, 2017, 1:08 pm

    I cannot fathom taking out loans to pay for kids’ undergraduate education. I would never do so.

    I cash-flowed their undergraduate tuition (with them contributing as they could) and I made it clear they were on their own for grad school. This was before I was on board with the FIRE program.

    I paid for my grad school with a Teaching Assistantship–for my first masters’, and my employer paid for my 2nd masters. I expected my kids to do the same, but they left grad school with debt. Nevertheless, I cannot complain. My daughter lived like a monk and paid off her debt in a little over a year. My son amazes me at how much he’s putting toward debt service. Both kids will be millionaires before they’re through.

    • Mad Money Monster May 8, 2017, 2:07 pm

      That is awesome! It certainly sounds like you gave them the financial mindset and tools they need to succeed. I hope to do the same for my daughter!

  • Duncan's Dividends May 6, 2017, 10:37 pm

    These are some pretty scary numbers, I was lucky that my parents paid for college and could afford to no problem. Then my company paid for my MBA and I got it free which was an awesome work perk. I 100% agree with your approach and the fact you appreciate it all the more for it. I fall on the other side of the fence with parents who could afford to put me through and I was just as appreciative of it and it and fell into the I’m going to succeed so that they haven’t wasted anything. Awesome post!

    • Mad Money Monster May 7, 2017, 1:37 pm

      Awesome work on appreciating your parents’ financial efforts. That is sometimes lost on students with a free parental ride.

      I, too, was lucky enough to have my Master’s degree paid for 100% by my company. I would’ve been a fool to not take advantage of that!

  • Carrie May 5, 2017, 11:12 am

    I admit that I am one of those parents that co-sign a small student line of credit for my daughter. My daughter worked her way through a undergraduate degree and her first masters. Our income prevented her from qualifying for government loans for her second masters so I felt obligated to help. I signed knowing full well we might have to​ pay it if she doesn’t. I know I can pay off the loan without affecting my retirement.

    • Mad Money Monster May 5, 2017, 11:47 am

      That’s a different story. If you choose to help out in the form of a loan AND still have your retirement bases covered, all is good. Congrats on having such a successful daughter. Sounds like you did a lot of things “right” 🙂

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