WASHINGTON — More than half of parents are willing to dip into their own retirement savings to keep their kids out of student loan debt, according to a new survey.
Fifty-three percent of parents surveyed would prefer to tap into their retirement savings to pay for college expenses than have their children take out loans, according to a new T. Rowe Price survey.
Also, 49 percent of parents polled said they would be willing to retire later so they could pay their child’s tuition. Some parents would even take on another job — 51 percent agreed with the statement, “I’d be willing to get a second or part-time job to pay for my kids’ college education.”
The T. Rowe Price survey, which was released earlier this month, questioned 2,000 parents who have both a retirement account and children ages 15 and younger.
Judith Ward, a senior financial planner and vice president of T. Rowe Price investment services says she understands why parents would make that sacrifice as student-loan debt impacts students’ financial well-being. But it is ultimately a foolish choice.
“Parents are making a mistake when they don’t prioritize their own retirement over college costs,” Ward says in a news release. “There are many ways to pay for college, and there is a wide variation of price tags for college degrees.”
It’s a shift for many aging parents. In the past, college was cheaper, pensions were more abundant and life expectancies were not as long. However, as pensions disappear and people live longer, saving for retirement is more important than ever, Ward says.
“We recommend saving at least 15 percent of your salary, which includes any match from your employer, for retirement. If a Roth IRA or Roth 401(k) contribution is an option, we recommend taking advantage of it,” Ward says in the release.
“Once retirement is on track, develop a plan to save for your kids’ college and aim to save enough to cover at least a down payment, about half the cost of a four-year education.”
The survey found some parents are comfortable with taking on debt to pay for college.
Fifty-two percent of the respondents are willing to take on $25,000 or more in debt to pay for their children’s college education. And 23 percent are willing to take on more than $75,000 in debt.
Nine percent said they would borrow “whatever it takes” to pay for college.
Read more on the T. Rowe Price website.
h/t: USA TODAY
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