Parents Tapping Into Retirement Funds to Pay for College
To fund the college education of their children, American parents are tapping into their retirement savings. A recent study by Sallie Mae and Gallup found that last year the number of parents who took a loan or withdrew from the 401(k) plans jumped to 7.4 percent from 3.4 percent.
Sarah Ducich, senior vice president of public policy at Sallie Mae - the leading provide of student loans in the U.S. - explained that parents are making such a move because of the high value they place on college education.
Besides the 24 percent who tapped into their retirement funds, other parents cut or stopped their retirement contributions.
While Ducich lauded the parents' sacrifice for their children, she pointed out they in so doing they are digging themselves into a financial hole.
Besides paying for the tuition, parents also have to spend for their children's clothes, books and other school supplies. Last year, according to data from the Census Bureau, sales at bookstores reached $2.2 billion.
This September, millions of Americans are expected to return to schools throughout the country with the opening of a new academic year. In October 2009, there were 77 million students in the U.S., from nursery school to college. They comprised 27 percent of the U.S. population.
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