NATION NOW

Millennial parents, still in debt, plan to pay for children's education

Sean Rossman
USA TODAY
The large majority of millennial parents plan to pay for at least part of their child's education, despite still owing themselves.

The large majority of millennial parents plan to cover at least part of their children's higher education, despite still owing thousands of dollars in student debt themselves.

The reason, said TD Ameritrade senior manager of retirement Dara Luber: The lingering student debt is a "pain point" for millennial parents, who don't want to see their children go through the same circumstance.

A TD Ameritrade survey took stock of the saving trends of millennial parents ages 19 to 37 and grandparents from 50 to 70. It found millennial parents still owed an average of $9,180 in student debt, while grandparents still owed a little over $1,000.

However, both generations are still saving for their kids and grandkids. Millennials, on average, are saving $310 per month for their children's education, while grandparents stow away a healthy $205 monthly for their grandchildren to go to school.

"It's very encouraging to see that parents are saving for college," Luber said. "They see how important it is to starting putting away now."

The most common car for millennials is ...

Millennial parents get $11K a year from grandparents. Why that's not bad.

8 crucial tax tips for Millennials

In fact, the top saving priorities for millennial parents were their children's education and building up an emergency fund. Saving for their children's education beat out savings for retirement, a down payment for a home and health and medical emergencies. Grandparents were most likely to choose retirement as their top saving priority.

"The fact grandparents are contributing is really helping," Luber said. "An education is something that they can always have. For grandparents, that's a way they can really leave their legacy."

Only about a fifth of caucasian parents said they plan to pay all of their child's education expenses. Hispanic and Asian parents were twice as likely to expect to pay for their children's education in full than white parents.

Millennial parents are willing to sacrifice to make sure they can afford the children's schooling. Half said they will eat out less, spend less on themselves and live a simpler lifestyle to make the numbers work.

Luber suggests millennial parents wanting to start saving for their children's education to begin with making a basic budget.

"Millennials are juggling many many things," she said. "No matter what their financial priorities, they should have a clear plan."

Other takeaways from the TD Ameritrade survey:

  • 64% of millennial parents with student debt believe it will be paid off before their children reach college age.
  • Six in 10 millennial parents are "happy to help" pay for their child's education, while four in 10 are "proud" to help.
  • Six in 10 millennial parents do not expect their parents to help pay for their children's college.
  • Six in 10 grandparents have paid for part of their children's college education.
  • In their teens, 61% of millennial parents held down a part-time job, compared to 52% of grandparents.
  • 63% of grandparents believe they prepared their children well for the real world.
  • 55% of millennial parents believe they have prepared their children well for the real world.
  • 53% of grandparents said their parents prepared them well for the real world.
  • 46% of millennial parents said their parents prepared them well for the real world.

Follow Sean Rossman on Twitter: @SeanRossman