Paying for higher education is a significant financial challenge for many U.S. families. When grant aid, direct contributions, and a child’s own student loans fall short of the full cost of attendance, parents are increasingly turning to parental student loans, primarily from the federal “Parent PLUS” program, to make up the difference. Parental student loan borrowers take on this debt during a stage of the life course in which they are expected to be saving for retirement. If parental student loan debt interferes with parents’ ability to save for retirement, such debt could threaten the retirement security of future cohorts of Social Security Administration beneficiaries and could lead some parents to decide to delay retirement. How, then, are parental student loans associated with the wealth and retirement behaviors of parents of college-aged children? This project will address these questions by leveraging unique measures of parental student loans in the National Longitudinal Survey of Youth-1979 Cohort, a national longitudinal survey of U.S. adults born in the late 1950s and early 1960s who were between the ages of 55 and 64 in 2020. I will estimate the longitudinal associations between parental student loan holding, parental student loan balances, and measures of financial wellbeing, including net worth, retirement savings, financial assets, home equity, and unsecured debt levels, among parents of college-aged children. I will also estimate the relationships between cumulative parental student loan borrowing, early retirement status, and the expected age of first Social Security retirement income claiming.
The UW-RDRC is an organizational unit of the Institute for Research on Poverty. Visit the IRP website to learn more.