Lingering student loan debt for parents is threatening their kids' college educations, according to a new study by the CFP Board.

With student debt at an all-time high and the cost of higher education rising with each passing year, the study finds that about a third of American parents are still paying their own student loan debt, impacting their ability to save for their children.

“Managing expenses from the past and present is crowding out planning and saving for the future, including children’s higher education, retirement and even essential emergency funds," Eleanor Blayney, the board's consumer advocate, says in a release.


Brian Kazanchy, a wealth advisor with RegentAtlantic in Morristown, N.J., says he believes the slow recovery from the recession six years ago is probably also a factor.

"It's an environment in which people were only more recently getting back to work," Kazanchy says. "There hasn't been as many people employed, nor as many people getting wage increases in recent years."

Although RegentAtlantic clients tend to have sufficient funds to send their children to college, he says, the subject is one that the planners at the firm discuss often with their clients.

That's partly because private college costs have been rising at an average of 6.5% a year and public college costs at about 6.3% a year since the 1970s, Kazanchy says he tells clients.


Rick Boss, a Garrett Network planner with Table Rock Financial Planning in Boise, Idaho, says he thinks that planners may end up attracting mostly those clients who are willing to address these debts.

In publicizing the board's survey, Blayney says investors with debts should hire planners with CFPs.

But there may be a baked in conflict preventing that from happening, Boss thinks.

"The people who fit this profile [of mature parents with unpaid student loans] don't end up hiring me," says Boss, a CFP. "So many of the people who come to me are much more on the responsible end of the spectrum. The responsible people come in and get planning."

When he does work with clients who still carry student debt, Boss says, they usually come to see him after deciding that they are serious about getting rid of it.

"I'm confident they will be fine," he says.

The board's survey also found that expenses are preventing more than two-thirds, or 69%, of parents from saving for their children’s college education, according to the study administered online by ORC International, to 1,003 parents of children under age 18, between Sept. 2 and 7.

Furthermore, nearly one-fifth of parents, or 17%, are not currently saving and have no plans to save for their children’s higher education.

While a majority of parents (56%) hope to qualify for or are “counting on” financial aid to send their children to college, according to the study, nearly one in four have not started to think about financial aid for their children.


The survey comes on the heels of the U.S. Government Accountability Office's study on student debt and retirement savings which lays out the problem in stark terms.

It finds that while only 3% of households headed by those aged 65 or older --about 706,000 households -- carry student loan debt, about 24% of households headed by those aged 64 or younger -- 22 million households – are still paying off student loans.

The board's study further finds nearly half of American parents, 47% in all, borrowed to pay for their own higher education. Of those parents, 42% still have debt to pay off, with 15% having more than $25,000 still to repay.


The high cost of living also is a big factor in parents' ability to save, respondents told the board.

For that reason, more than two-thirds, or 69%, of parents have not started saving for their children’s higher education. Nearly half of American parents, or 48%, say that student debt has prevented them from saving for other priorities such as an emergency fund (33%), retirement (32%) or their children’s higher education (31%), the survey found.

Additionally, saving for their children’s higher education is not most parents’ top priority. Instead, parents said their most important financial goal is building an emergency fund (40%), followed by saving for retirement (33%).

"Some parents appear to have unrealistic expectations about their ability to balance funding a child’s college experience with their own financial goals," Blayney says in the release. “Many parents may not be effectively investing for college, losing out on tax benefits and higher returns from 529 plans and investments."

Of parents who have saved for their children’s higher education, most (53%) have put away less than $10,000 for their oldest child (typically the one headed to college first), the survey found. With each additional child, parents are more likely to have not started saving.


For some perspective on what this lack-of-preparedness will mean for students' future educational expenses, the College Board reports that the average undergraduate tuition, fees, room and board for the 2013-2014 academic year amounted to $18,391 for public, four-year institutions for in-state students and $31,701 for out-of-state students. Private, nonprofit colleges and universities averaged $40,917, according to the College Board.

Despite impediments to saving, Kazanchy says he often cites the following numbers when urging parents to prepare carefully for their children's college education: Average annual earnings for high school graduates is $32,600, $62,200 for those with bachelor's degrees and $89,300 for graduates with advanced degrees, according to federal figures.

"The value is still there," Kazanchy says.

Read more: