The Student Debt Domino Effect: How the Student Loan Crisis Affects Entire Families

ScholarNet Blog Articles | June 9, 2020

For many families, watching their students begin their higher education journey is a bittersweet experience that often means letting go and watching them take their first steps into self-sufficiency. But the student loan crisis has added even more anxiety to the experience.

Pressures to attend college combined with rising educational costs mean parents and other extended family members are making sacrifices to help their students shoulder the financial burden.

“Education imposes anxiety on families at the same time it’s supposed to be increasing independence and freedom of young adults,” says Caitlin Zaloom, associate professor of social and cultural analysis at New York University.

The Domino Effect

With more and more family members stepping up to help their students pay for their education, the middle class is seeing a domino effect of debt that can often ripple through generations. Often, parents are forced to choose between funding their child’s education and their own financial goals, such as saving for retirement. After they leave school, more and more students are feeling pressured to put off major milestones, like starting a family or buying a home, in order to pay down their debt. For some families, parents are still paying off their own student debt by the time their children start college.

Contributing Factors

There are many driving factors behind the student loan crisis, but according to Zaloom, one of the big ones is the idea that in order to be successful, you must earn a college degree. “But that itself depends on the ability to pay, which thrusts us right into the paradox of it all — which is that on the one hand, young adults and the parents who support them have this very clear goal about getting a college education. On the other hand, that is going to cost them dearly,” she says. In her book Indebted: How Families Make College Work at Any Cost, she raises questions about what degrees are really for. “Parents and students are being asked to put down a lot of money on the idea that it will pay off sometime in the future,” says Zaloom. While families are becoming more aware of the need to analyze the cost and benefits of a degree, it can still be difficult for families to find the higher education option that best fits their needs.

Slow the Cycle

Students and their families can take steps to help slow the student loan debt cycle by carefully considering their higher education options. In addition to realistically evaluating how different degrees in different fields could impact life after college, students and families should research the institutions themselves. Pay attention to the amount of debt a school’s graduates leave with, and factor that information into your decision to attend. Look out for colleges that offer grant-based financial aid packages and scholarships which can reduce the need for student loans. Also, consider the type of educational experience that will work best for the student. Class size, program offerings, and campus culture are a big part of college life, and every student’s needs are different. For some, opting for a smaller school or a two-year program may fit their needs while saving money.

While the higher education experience can have a dramatic impact on students and their families, the effects of student loan debt can be reduced with the right knowledge and support. ScholarNet is here to support you as you support your students. Check out ScholarNet Central for resources on a variety of topics designed to help make navigating the world of higher education a little easier.

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