I’m diving into an ugly discussion here about a middle-class reality: student debt.

I’ve seen this movie too many times. Far be it from me to cast aspersions on the failings of my clients or their children. But at least a couple times a year, I would find clients who had signed on to pay for their children’s college debt, assuming that once out of school, the child would be responsible for repayment. Alas, the child decided (for whatever reason) they were not interested in “adulting” at that level. And Mom and Dad, responsible on paper, continued to make the payments, often at the expense of their own retirement security.

It’s very sad to me.

I’m referring to scenarios where parents use the Parent PLUS loan, the most expensive and least flexible of the federal loan tools available to fund education. We’ve become inured to its risk and its inflexible terms. By making it easy to throw money at children for education via their parents’ credit history, we’ve ignored the part about raising children to accept responsibility for their decisions. And we’ve also ignored the need to live within our means. After all, parents role-model their own financial narratives, leaving their children to internalize them.

Before I continue, please note that the title of this piece is NOT “Should You Help Your Children Fund College?” If you want to fund your children’s education, go right ahead. I’m only suggesting that you avoid this particular tool (Parents PLUS).

There are lots of options for getting and funding an education, and I’m a fan of work/study money in addition to scholarships, grants, and federal student loans. I recently learned that there are even cool regional tuition programs for specific majors.

I’m also a big fan of having undecided students enroll for two years at a quality community college first to earn their general education credits. Why? Because while good schools can “mint” freshman applicants, to fill the junior class after transfers and attrition, these schools need to offer scholarships to the “A” students. In the spirit of “It’s not where you start, it’s where you finish,” I’m a fan of getting a start at community college to ensure that higher education is for your child before anyone spends the “big bucks.”

I don’t want to tell you how to parent your kids. But understand that some of what you do is done out of guilt and not according to your values. Stop it. Hurricane Jackie once told me, “Get as much scholarship money as possible because we’re paying ‘retail’ for your brother.” (Yup, that’s a direct quote.)

So, I did.

And I also had a job every semester I was in college. (I even moonlighted.) What’ s more, I learned in my 30s that, while my brother and I were in school, HJ dragged my grandmother and a folding chair to the flea market on weekends to sell excess inventory from my father’s hardware store.

The lesson? If you can’t afford to pay for college, acknowledge it and check your kids’ entitlement at the door.

Sorry for the tough love, but if you screw this up, you could be in a bad place for many, many years. As I said at the outset, I’ve seen this movie. And I don’t understand how children can do this to their parents and how parents let their children squeeze them to the point where their only recourse might be to sue their own child.

Thus, my newly arrived conclusion is that parents should not co-sign college debt. Parents should save and help repay if they can and fund it out of cashflow. Parents should even help with future cost of living expenses if they feel bad that a child has an onerous repayment. But I do not think that parent-secured college or graduate school loans–Parent PLUS loans–are a good idea.

Reading: Bloomberg.com https://www.bloomberg.com/graphics/2024-college-return-on-investment/

Copyright © Madrina Molly, LLC 2024. All rights reserved.

The information contained herein and shared by Madrina Molly™ constitutes financial education and not investment or financial advice

Sherry Finkel Murphy, CFP®, RICP®, ChFC®, is the Founder and CEO of Madrina Molly, LLC.

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