Student Debt Becoming More of a Family Problem

By Howard Rothman in New York

NEW YORK ( MainStreet) -- When my daughters were nearing college age, my wife and I made a deal with them. We'll pay full freight for any undergraduate school you attend, we told them. You're responsible for all post-graduate expenses.

Despite their continuous run of scholarships and work-study jobs, our offer forced all of us to rely a lot more on student loans than we ever anticipated. And now, two bachelor's degrees and a doctorate in veterinary medicine later, the Rothman family's collective student loan debt is -- gulp! -- well into six figures.

We've all heard tales about the explosion in individual student loan debt, but not as much about the impact these loans are having on whole families. And while there's no clear data on family indebtedness, there are plenty of indications that parents like us are piling on loan obligations as fast as our children.

"There absolutely are more parents taking out loans today to help make up the gap between other financial assistance and the cost of college attendance," says student loan expert Heather Jarvis. "And it seems that delinquency rates are rising for these borrowers as well."

The overall problem is easy to understand: college costs are climbing, and incomes are not. The average total cost of enrollment at a four-year private school rose to more than $43,000 a year in 2012, according to the College Board, while the annual price of an in-state public education topped $22,000. Tuition alone shot up nearly 70% at many institutions over the past decade, and coupled with the hit that family income took during the recession, the total heft of loans skyrocketed.

"Student loan debt is the only kind of household debt that continued to rise during the Great Recession and has now the second-largest balance after mortgage debt," wrote Donghoon Lee, an economist at the Federal Reserve Bank of New York upon release of the group's recent report on the problem.

The total amount of student loans in the U.S. reached $1 trillion in 2012, according to that New York Fed study, triple what it was just eight years earlier. But it's not students alone taking on this debt: $149 billion, or 15% of the balance, is held by nearly 7 million Americans over age 50. And those over 60 are actually the fastest-growing age group for college debt, responsible for $43 billion in 2012 compared to $8 billion in 2005.

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