A sandwich of college costs is about to squeeze parents with student loans.

After a three-year pause, required payments on federal loans are scheduled to restart in coming months, straining Americans’ finances. The situation is uniquely tough for borrowers with children who want to go to college one day. These parents desperately want to help their kids shoulder the cost of higher education, but will find it harder to set money aside as payments resume.

The common image of someone burdened by student loans is a recent grad in their 20s, but a significant number of older people are still carrying debt from their college years, or Parent PLUS loans they took out to help their children pay for school. The largest chunk of federal student loans — some $636 billion held by 14.7 million people — belongs to borrowers aged 35 to 49.

“I don’t want my daughter to go through the same thing,” said Whitney Mitchell, a 37-year-old who works for a nonprofit in Alabama and has an 8-year-old. “But I don’t know which ball I would have to drop to save enough for her to go to college.”

Mitchell took out $40,000 in federal student loans when she enrolled in college more than a decade after finishing high school. She graduated in 2020 after the pandemic-era freeze took effect, meaning she’s one of millions of people who’ve yet to pay a student loan bill.

Payments will resume no later than Aug. 29, depending on when the Supreme Court hands down its decision on President Joe Biden’s one-time forgiveness program. Borrowers are also waiting to see how changes to income-driven repayment plans may affect their monthly bills. But no matter what happens, many people with budgets that are already overextended will be hit with extra costs.

Mitchell anticipates needing to pay $300 or $400 per month toward her loans, which would put her on par with the pre-pandemic average.

“I don't know if I’m financially ready for it,” she said. “Groceries are really high, gas is really expensive, our other bills are going up.”

‘Generational Thing’
She’s not alone. An April 2021 survey by The Harris Poll found that 68% of people born between 1981 and 1988 still had student debt.

Many people end up carrying that debt for decades. There is $269 billion in outstanding federal student loans held by people aged 50 to 61, and $111 billion carried by people 62 and older, according to data from the Department of Education. That’s more than the $99 billion owed by borrowers 24 and younger.

Student Debt Balances by Age Group | The share of Americans with student loan debt in the first quarter of 2023
The fastest growing demographic with student debt is people over 50, said Natalia Abrams, president of the Student Debt Crisis Center, an advocacy nonprofit.

“So many parents have to deal with their own personal student debt and the extra loans they’ve taken out as Parent PLUS loans for their children,” she said.

Megan McCarthy is facing the prospect of three generations of her family carrying student debt. The 34-year-old, who works in social welfare in Oneonta, New York, has about $80,000 in federal loans, with monthly payments of about $200 set to return this summer. Meanwhile, her mother has Parent PLUS loans — she won’t tell her daughter how much — from helping her four kids, including McCarthy, with their college expenses.

Now, McCarthy has a 9-year-old daughter and is already worried about paying for her education.

“It’s like a generational thing that’s being passed on,” she said. “My daughter is into running and gymnastics, so I’m looking into scholarship opportunities and I’m saving every little bit I can, but then emergency stuff pops up.”

Tuition Hikes
The squeeze is likely to get worse as the cost of college increases.

A public four-year school cost an average of $20,500 and a private nonprofit cost $52,590 in the 2022-23 academic year, according to College Board data that includes tuition, fees, room and board. Those prices have more than doubled since the 1970s when adjusted for inflation. And that’s just the average: For a highly prized spot at an Ivy League school, the price tag is now approaching $90,000 a year.

Matt Bruss is already worried about the cost of college for his kids. The 42-year-old lawyer in Detroit has been aggressively paying down his private loans during the pause, but still has about $11,000 left in federal and private debt.

He and his wife plan to be pragmatic when talking about which majors their kids, ages 7 and 9, should pursue and which colleges are worth their sticker price.

“I would love to be able to pay for their college. I don’t want them to go through what we went through,” said Bruss. “School was nothing compared to the 10 years trying to get out of that hole of debt.”

This article was provided by Bloomberg News.