Grandparents are in the hole for $36 billion for student loans. Some of these debts are because of their grandchildren. They co-signed the loans. Then the grandkids defaulted.
The grandchildren could have gotten their B.A. degrees for under $15,000 by avoiding the standard approaches to college. They could have funded all of it themselves by working part-time. But they went to their grandparents to fund their years of party time. The grandparents signed on. Now they are trapped.
I cannot imagine anything more risky than this in your retirement years. Grandparents are encouraging students to take on debts that are completely unnecessary. After graduation, if the grandkids want out, they can just stop paying. The lenders will then present the bill to grandparents.
There is then no escape.
In the misguided belief that they are doing their grandchildren a favor, they are luring them into the worst financial decision of their lives. Then the kids pass on the burden to the grandparents. It’s a lose-lose situation. Bit not for the lenders.
The Bible repeatedly warns against co-signing a note, which in the King James English is called “surety.” If your grandchild ever makes this request, show him the alternatives.
This news is from the New York Federal Reserve Bank.
They found that Americans 60 and older still owe approximately $36 billion in student loans. In the third quarter of last year, the Fed found that Americans owed $870 billion in student loans and borrowers age 60 and above accounted for 5% of that overall figure, while those fifty and above accounted for 17%.
One expert in college financing has told the truth. The old strategy is no longer working.
Well, I think a lot of it is going to come down to changing our perspectives about what is an acceptable burden of debt to take on for a college education. That clear connect between getting that degree and then getting a good, solid job that leads to a prosperous career just isn’t there anymore. The recession has just blown that up, as has the escalating cost of college.
The value that we’ve all assumed came with a college degree simply isn’t there.
The news is slowly getting out, but it will take a complete re-thinking of college costs and benefits to change the minds of guilt-ridden parents. Grandparents must re-think this, too.