Planners can help clients save for their children’s college education by suggesting various ways to budget for the future expenses. One suggestion is that parents redirect the money they used toward full-time daycare toward saving for college in a dedicated college savings account like a 529 plan. Another suggestion is finding an alternative to daycare and allocating those funds to a dedicated savings account or saving a portion of one spouse’s income specifically for children’s education.5

Financial planners need to be aware of the impact that parental views of student loan debt can have on children’s education decisions. Not only do the parents’ views influence the decision to obtain funding, but they may also influence the decision to even attend. In addition, financial planners can focus on the factors that influence parent’s views and seek to implement policies that can target those factors.

According to this study, parents who are paying off their own student debt are less likely to invest in tax-advantaged accounts for their children’s education. Financial planners can introduce the concept of these accounts early to these clients to educate them on the potential losses they face by not using these accounts. While these parents may prefer to pay off their own debts in an effort to secure their retirement, planners can show the benefits of working on these goals in tandem.

Additionally, financial planners can educate parents on the other options available for students to fund their college education. It should not be solely up to the parents to fully fund their child’s education, especially if they are still financing their own debt. Again, by targeting the parents who are still under this financial burden, financial planners can provide options ahead of time. These options can be worked into the comprehensive financial plan so that parents do not feel overwhelmed with paying down their own debt while saving for their children at the same time. Not only can students obtain scholarships, but they may also qualify for other aid by using the FAFSA. Financial planners can encourage parents who are paying off student debt to get the FAFSA in early to avoid their children being in the same situation.

Endnotes

1. Earnings and unemployment rates by educational attainment available at
2. See Students quick payday loans Merrimac Massachusetts Missed Out on $2.6 Billion in Free College Money, by Anna Helhoski. Posted by NerdWallet. Available at nerdwallet/blog/2018-fafsa-study.
3. See the Journal of Financial Planning Observer article, Discussing College Funding with Children.
4. See the Journal of Financial Planning Observer article Alternatives to Borrowing for College.
5. See College Savings Tips for Working Parents, by Kathryn Flynn. Posted by SavingForCollege. Available at savingforcollege/article/college-savings-tips-for-working-parents?.

References

Avery, Christopher, and Sarah Turner. 2012. Student Loans: Do College Students Borrow Too Much-Or Not Enough? The Journal of Economic Perspectives 26 (1): 165192.

Baker, Amanda R., Benjamin D. Andrews, and Anne McDaniel. 2017. The Impact of Student Loans on College Access, Completion, and Returns. Sociology Compass 11 (6): e12480.

Baum, Sandy, and . College on Credit: How Borrowers Perceive Their Education Debt. Journal of Student Financial Aid 33a (3a): 719.

Belfield, Chris, Jack Britton, Lorraine Dearden, and Laura Van Der Erve. 2017. Higher Education Funding in England: Past, Present and Options for the Future. Institute for Fiscal Studies Briefing Note BN211. Available at

Bennett, Doris, Cynthia McCarty, and Shawn Carter. 2015. The Impact of Financial Stress on Academic Performance in College Economics Courses. Academy of Educational Leadership Journal 19 (3): 2530.

Bozick, Robert. 2007. Making It Through the First Year of College: The Role of Students’ Economic Resources, Employment, and Living Arrangements. Sociology of Education 80 (3): 261285.