sandwich generation

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Quick notes:

  • Parents today are paying for their kids’ college costs while still repaying their own student debt.
  • There are many different options for paying off college debt.
  • Saving money wherever possible can be key to paying off student loans.

Maybe you’ve heard of the “sandwich generation” — those Baby Boomer parents caring for elderly parents while covering their kids’ financial costs. Now, in 2019, meet the “sourdough generation” — the middle-aged mom and dad who are covering their children’s college costs while still paying down their own college loan debt, sometimes 20 years or more after leaving campus.

According to the Brookings Institution, about 3.4 million Americans owe roughly $90 billion in Parent PLUS Loans, i.e., loans specifically taken out by parents to help their kids cover college costs.

Additionally, Americans aged 50 or older owe $289.5 billion of their own student loan debt, according to AARP, up from $47 billion in 2004. That figure doesn’t even count U.S. parents between 40 and 50 who owe billions more in student loan debt.

It’s a financial squeeze that’s taking a toll on U.S. parents raising college-age children, with student loan and tuition bills rolling in, and with household cash rolling out every month.

“My son is 30 and I’ve been paying his loan (off and on with deferments) for 10 years because I have another son that is currently 25 years old and needed to pay for his school, too,” says Saideh A. Brown, chief executive officer at Global 50, a sports marketing firm geared toward female athletes based in New York and Los Angeles. “It’s a lot to deal with. There was really no way my husband and I could have anticipated the economic crash in 2008 that forced shifts in our finances that we are finally recovered from.”

“As parents, we assume these responsibilities to make things easier for our children but paying a mortgage, cars, our own parents’ expenses can make things seem burdensome at times,” the 48-year-old Brown says. “I am blessed and I have a wonderful husband but this is a larger financial issue that many want to admit.”

Dealing with the problem

Parents who find themselves in a generationally bookended college financial bind do have some proven remedies to curb their family debt problems. Financial experts advise taking the following action steps that both parents and children can use to cut or eliminate student loan debt:

Borrowers burdened by the costs of their student loans should look at income-driven repayment plans. “These plans allow borrowers to cap their student loan payments at 10%-to- 15% of their discretionary income,” says Robert Farrington, founder of the website “That number is calculated on the number of dependents they have, which could include aging parents in some cases.”

An income-driven plan is a much better approach than deferring or forbearingstudent loans. “That’s because income-driven plans all count towards future loan forgiveness,” Farrington adds.

Batten down the hatches. Families can start cutting down unnecessary expenses and earn more income to better deal with the problem. “For example, kids can take up part-time jobs to earn money to contribute to their college fund,” says Gladice Gong, creator of the personal finance website Earn More Live Freely. “Parents can consider asking for a pay rise or start a side hustle to make extra money.”

Extend the loans out and lower monthly payments. Parents squeezed by student loan payments can extend out the loans, to ease the financial pressure. “When it comes to choosing the right student loan, they can explore options that best suit their situations,” Gong says. “For example, they might want to go for a loan with the longest grace period if they want to delay the loan repayment as much as possible. Or they might want to go for a loan that has a very low minimum monthly repayment.”

Go the consolidation route. Consolidating student loans can improve the financial position of family borrowers both now and down the road, financial experts say. “Added flexibility includes monthly savings, the opportunity to pay off the loan faster or extend it for lower payments, and the convenience of one easy payment,” says Theresa Williams-Barrett, VP of consumer loans and loan administration for Affinity Federal Credit Union, in Wyckoff, New Jersey. “Also, moving to a fixed rate from a variable rate allows borrowers to know exactly what they are expected to pay monthly.”

If you have a good credit score to qualify for refinancing, try consolidating now, Williams-Barrett advises. “That helps reset your financial burden and free up funds to start saving and achieving personal life goals,” she notes.

Use “windfall” money to pay down student loan bills. Both parents and adult children dealing with student loan debt should focus on paying down that debt as quickly as possible. Once the student loan debt goes away, the family financial friction goes away, too.

One way to get that job done is to take any “found” money, i.e., cash from an inheritance, workplace raise or bonus, lottery or gambling winnings, cash from a side hustle, or other nontraditional cash earnings, and use it to more quickly pay down student loan debt.

Daniel DiGriz, CEO of MadPipe, a New York City marketing and branding leadership company, was able to cut tens of thousands of dollars in student loan debt within one year in large part by taking any extra dollar he had and steering it into student loan debt.

“The debt was manageable, but it just seemed like there was no way out,” DiGriz says. “And it was always a psychological burden, and that was a consideration in all my options.”

DiGriz says he ultimately made a decision to “destroy” his student loan debt.

“I did an inventory of my costs and cut the fat, and I put every spare dollar toward the loan — if I picked up a couple of hundred dollars here or there, I sent it in,” he says. “I did extra work and I skimmed off of my lifestyle, scooping up any excess cash for the student loans.”

DiGriz made payments much more frequently than required, which kept denting the interest, and found extra work to raise bigger chunks of money to cut his student loan debt.

“32 weeks later, my balance was zero,” he notes. “Basically, I set a target, applied myself, and I now owe nothing to anyone — and no student loan debts at all.”

Last resort? Stick the kids with their own college bills. Of course, when drastic measures need to be taken, parents have one “DEFCON 5” button to push to save the family budget — make the kids handle 100% of their own college bills, including their student loans.

“This is a simple problem to solve,” says Jeff Rose, a financial planner and CEO at Good Financial Cents in Nashville, Tennessee. “If parents are still paying off their own college loans they have zero business helping their kids with college costs. I had several clients in a similar situation, and I had to show them with concrete numbers they couldn’t afford it unless they never wanted to retire.”

Rose says he understands that parents want better for their kids and they think they’re helping them by paying for their college.

“But the reality is when retirement comes and they can’t afford the necessities, they’ll have nowhere else to go but to their kids for their financial support,” he says.

A deeper dive — Related reading on the 101:

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