Is Your Student Loan Debt Affecting Your Child’s Education Plans?

September is National College Savings Month–an effort designed to raise awareness about the importance for families to save for their children’s higher education expenses and reduce reliance on loans.

While most of us could learn more about the most efficient ways to save for our children’s education, we are all well aware that it’s one of the most significant and largest expenses we will likely ever have to incur for our kids.

Many parents also have an emotional connection with this as more than 40 million Americans struggle with student loan debt of their own, and many consider it a leading cause of anxiety.

A study by T. Rowe Price finds that not only are parents worried, but 63% feel guilty that they won’t be able to pay more for their kid’s college education, and 70% would not want their kids to have the same experience with student loan debt that they are having.

For many, it’s more than guilt and emotions, particularly when it comes to younger parents. Forty-eight percent of millennial parents say paying off student loans has impacted their ability to save for their children’s higher education. spoke to T. Rowe Price adviser Stuart Ritter, CFP, about ways to help parents cope with the stress of student loans and financial solutions for reducing debt loads.

[Related: 3 Steps That Take The Stress Out of Student Loan Debt] The survey found that nearly half of millennial parents with student loan debt are having their own student loan debt impact their ability to save their kid’s college education. What do you tell people in this situation?

Ritter: It doesn’t have to be “whatever college at whatever cost” you can put parameters around the college buying decision as I like to say. Also, save what you can–think about putting a down payment on college rather than funding total costs for all four years. And it’s not an either/or proposition. Pay your student loans as you’re required, but you don’t have to pay them off any faster than that. Also, start saving in a 529 for your child’s college so you take advantage of the longest potential growth period possible, and help them to avoid the same situation you are in. What are some alternatives for helping their kids save for college?

Parents can set up a 529 account with automatic contributions to help make college savings a little easier. Deposits can start small and grow as their income grows. It’s also important to get family members, like grandparents, involved. Anyone can contribute to your child’s 529 plan. This lets you add lump-sum contributions along the way: birthday money, gifts, part of a bonus you might receive. What are some strategies for reducing their own debt loads?

Again, you don’t have to pay off your student debt any faster than required. Because student loan debt tends to have a relatively low interest rate, and that interest can be deductible, there are likely better uses for any ‘extra’ money you might have–like saving for your own retirement and for your child’s college education. Many people feel they have to choose between helping their kids go to college and saving for retirement. How should they prioritize and find balance?

First, get on track for retirement. At T. Rowe Price we suggest saving 15% of your salary (including any company match). If you’re not at 15%, put a plan in place to get there (for example, increase your contribution amount by two percentage points each January).  Once you have a plan in place, you can also prioritize saving for college. If you decide that’s more important than other goals, make sure how you use your money reflects that.  Perhaps it means driving a slightly older car, or taking a slightly less-expensive vacation to free up the money to put toward college. Making those kinds of trade-offs will ensure that you are making progress on the goals that are most important to you. Seventy percent of the parents with student loans said they would not want their kids to experience the same thing. Is student loan debt, and the stress and emotions that come with it, just a part of our new reality, even for future generations?

Thirty percent of recent college graduates got out of college with $0 of debt–so, no, it is not an inevitability. Student loans are a choice, affected by how much you and your child save, what school they choose to attend, and a host of other factors. If avoiding a level of debt that leads to stress is a goal, it can be achieved.