A big argument against starting a college saving fund is saving for retirement. Why save for college funding if your child can take out student loans? They’ll have time to pay them back. Plus, there aren’t any loans you can take out for retirement. While that is true, it leaves out one question: what will your child retire on?
The average college student graduates with around $27,000 in student loan debt. This is considered a manageable amount of debt, considering that the degree they’ve earned will start them at a good salary (substantially more than if they hadn’t gotten that degree at all). But, while manageable, this debt means that for around 10 years of their career a graduate will pay off their loans instead of putting money into a savings or retirement fund – missing out on years of interest and employer matching.
According to a recent study by financial investment website NerdWallet, by the time a graduate pays off their student loans they will have saved around $2,466 for retirement. If the same student had graduated without debt they could have saved over $30,000 more. Besides the substantial loss to their retirement fund, a college graduate today shouldn’t expect to retire until they’re around 73 years old – 12 years old than retirees today!
So, no, you can’t take out loans for retirement, but neither can your child. Leaving them to take out student loans to pay for their education can leave them in a horrible financial situation later on.
You can’t change what the future holds for your child, but why not give them the best chance they have at a successful financial future? Starting their college savings now could give them a better start later, and a 529 Savings Plan may be exactly what you need to start saving.
To see how you could start saving today, check out our Florida 529 Savings Plan.
