What legacy can parents with student loans leave to their kids (that isn’t more student loans)?

Most parents hope to create wealth to benefit their children. They dream of helping their children become successful, so they can pass prosperity on to the next generation, the grandkids, and so on. Unfortunately, today’s economy and the increasing burden of student debt may shrink or erase any legacy parents might create for their kids.

Much of the reporting on student loans throws around big numbers—$1.53 trillion in debt! A rate rising faster than inflation and family income. A new study by AARP and the Association of Young Americans shows that student debt is preventing generations of Americans from saving for major life milestones. The generation hit hardest? Millennials.

The study found that 48% of millennials (ages 23 to 38 in 2019) are paying off a student loan for themselves or someone else. And because of crushing student loan debt, millennials have to hit pause on saving for other life goals, like buying a car or house, or having a worry-free retirement... or putting their kid on the brightest path to the future.

Debt doesn’t vanish just because students become parents. They may be carrying tens of thousands of dollars in debt by the time they graduate. They can be optimistic about getting out from under this debt, because they are on the high of entering the professional world and building a career. However, the realities of compensation for graduates often do not live up to their expectations.

Raising kids takes a lot of time, patience, love, and, of course, money. A salary has to stretch to cover everything from housing and food to child care and transportation costs. Parents have to start paying back their student loans or watch the debt grow month after month. After a number of years, there is a 96% chance that they will still owe more money than they took out in the loan.

When college for their kids starts looming over the horizon, tens of thousands of parents aren’t ready. With budgets already stretched thin, how can they find even more money to bolster a child’s future? Most Americans don’t save enough for retirement or against emergencies, and certainly not enough to pay for their kid’s college tuition. It’s a slow-motion emergency, a rolling boulder of future student debt.

Many parents have learned from their own experiences that paying for college and managing student loan debt is hard. They dream of ensuring their children the advantage of higher education, and freedom from years, maybe decades, of crushing student debt. That’s where a 529 plan comes to the rescue.

A 529 plan is a tax-advantaged savings plan designed by the government to encourage saving for future education costs. Even though it’s been around for almost 30 years, only 27% of American families take advantage of it. They may find signing up to be confusing, time-consuming and complex, diverting time and energy needed elsewhere.

With all these concerns in mind, U-Nest was born. It’s a mobile app that helps empower families and friends to save for a kid’s education by making a 529 plan easier to start and keep up with. Every day more and more people download the U-Nest app. People are getting serious about sending their kids through college; that’s a great sign! It takes only 10 minutes to set up using U-Nest, and as little as $25 to start growing a 529 plan. That big dream of sending kids to college and out into the world without debt hanging over their heads starts to become reality. Real hope is inspired that kids will have a chance to prosper, and empower the generations that follow.

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