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Student loan debt is now the second highest consumer debt category in the United States only behind mortgage debt, but higher than both credit cards and auto loans. The number in the US is $1.5 trillion, not a small number.

But, consider the emotional toll for families. Think about the college graduate who did not get the job they thought they would have and a $500-month loan payment is just not affordable. Only to turn to the bank of Mom & Dad and find out they cannot help either because they are saving for retirement.

Students sometimes sign up for federal loans in their name because they can get lower rates, thinking Mom & Dad will make the payments. Sometimes parents borrow in their own name through the federal “Parent Plus” program under which they can borrow larger amounts than their children. In this situation parents are legally responsible for the loan even if they expect their children to make the payments.

The problems start when one party can’t—or won’t—make the payments.

Sometimes the emotional toll starts as children begin to pick colleges. Parents may need to tell their children some schools are “off the table” because they are not willing to take the loan out for an expensive college. This conversation will be tough for students that excelled in high school.

So, how do you avoid all this emotion at this milestone of your children’s lives. I think family meetings can help as parents review budgets with their children to decide what realistic options there will be for college. These conversations should start as children enter high school to manage expectations. The conversation sounds simpler than it is.

This is a problem where a financial planner brings a tremendous amount of value to a family. Helping to understand all the family’s goals, education, retirement, and anything else that is on the list and creating a cash flow path to reach the children’s education goals while still achieving a successful retirement for the parents can be invaluable.

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Peter B. Smith is a Family Wealth Advisor at the Planning Solutions Group in Fulton, MD and is an Annapolis resident. He can be reached at 301-543-6008 or by email at