The Effect of Student Loans on Parental Views of Education Financing

College costs are increasing, and most students need to save or borrow to pay for education. Outstanding parental debt may affect the decision about how to fund their children's education. The purpose of this research is to investigate whether parents' own student loan balances affect thei...

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Bibliographic Details
Published in:Journal of financial planning (Denver, Colo.) Colo.), 2020-06, Vol.33 (6), p.46-57
Main Authors: Martin, Terrance K, Augustin, Lua A V, Ricaldi, Laura C, Nunez, Jose
Format: Article
Language:English
Subjects:
College students
Decision making
Education
Higher education
Student debt
Student loans
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Summary:College costs are increasing, and most students need to save or borrow to pay for education. Outstanding parental debt may affect the decision about how to fund their children's education. The purpose of this research is to investigate whether parents' own student loan balances affect their decision to save for their child(ren)'s college education via tax-advantaged education saving vehicles and if their debt affects their decision to take out loans on behalf of their child(ren) for educational purposes. According to this study, parents who are paying off their own student loan debt are less likely to invest in tax-advantaged accounts for their children's education. For financial planners, this research highlights the importance of advising parents who may have their own student loan debt to start saving in taxadvantaged vehicles early.
ISSN:1040-3981