In decades past, people in their 40s had largely already put their own student-loan debts behind them and were able to turn their attention to preparing to help their children pay for their educations. More recently, though, educational debt has become a persistent trouble for Americans, weighing down their finances well into adulthood.
Indeed, a 2013 Federal Reserve Bank of New York study showed that student-loan delinquency rates among those 40 to 49 were the highest of any age group as of the fourth quarter of 2012 -- more than 16 percent -- with other age groups falling in the range of 9 percent to 13 percent. With a third of student loan debt held by Americans over age 40, many parents don't have the luxury of being able to give their children's education as much financial attention as they'd like.
Yet for those who have children, the 40s are often college-savings crunch time. To fight back against student debt on both fronts, let's look at some tips to help you juggle all the issues you face in your 40s.
1. Finalize Your Own Payoff Plan.
If you still have your own debt outstanding, you should establish a firm plan on when and how you'll get it paid off. Most borrowers who've extended their loan repayment plan into their 40s have already taken advantage of programs like consolidation or income-based repayment options, so in many cases, all you'll need to do is project current payments forward to get a firm handle on your cash flow and what impact your loans will have on your overall finances, both for yourself and your family.
2. Ramp Up Saving for Your Kids.
Regardless of whether you've paid off your own loans or still have further to go, you'll want to look into taking greater advantage of tax-favored 529 plans and other college savings vehicles as your kids enter their teens. Even if you're late to the college-savings game, anything you can set aside for your kids will help reduce their own eventual loan burden while also potentially giving you access to state income tax benefits and other tax breaks. With those in their 40s often starting to get into higher tax brackets, saving through a 529 plan can be an even better deal than it was earlier in your career.
3. Start the Scholarship Search.
Student loans get most of the attention in the college funding discussion, but free money from scholarships that you never have to pay back is obviously far more valuable.
With thousands of different scholarships offered by schools, employers, private individuals, charities, and other groups, you can find potential scholarships that fit your economic situation as well as your child's educational interests. You have to be somewhat careful to avoid scam artists who prey on students by charging for scholarship-search services that fail to deliver on their promises, but with the right resources, you can research legitimate scholarship opportunities. To get more information, start at the U.S. Department of Education's website.
4. Focus on Financial Aid.
As your kids approach college, it's also important to get your finances in order so that you maximize the amount of financial aid your children will qualify for. That means getting smart about how financial aid works and how schools take your assets into account in determining whether your kids qualify for aid packages. The rules governing financial aid are sophisticated, but in general, keeping assets in parents' names is smarter than having assets directly in a child's name. Moreover, certain assets, such as your personal residence, retirement accounts, and insurance policies, are exempted from the financial aid calculation, making it smart to consider shifting assets well in advance of your children reaching college age in order to put them in the best position possible to maximize their aid eligibility.
You Can Win Both Battles
Even 40-somethings who are dealing with their own student-loan debt as well as having to pay for their kids' college education can succeed in accomplishing both tasks. It's not always easy, but by paying attention to these four areas, you'll be in the best position to handle your entire family's educational finances.
The Monster in the Closet: Economic Horrors and Scary Movies
College Finance Tips for 40-Somethings: Fighting a 2-Front War
If you thought this classic horror movie was about a haunted house, see if this scenario sounds familiar: An idealistic young couple buys a home that sounds too good to be true. Once they're mortgaged to the hilt, problems start to crop up. They can't leave, they can't stay, and an unseen evil force starts to tear their family apart.
Filmmakers have used zombies to symbolize everything from faceless corporations to the inhumanity of the military industrial complex. In this early offering (and, to a lesser extent, in its remake), it isn't particularly hard to figure out the greater symbolism of a bunch of mindless, shambling zombies swarming into a shopping mall.
Speaking of mindless shambling, "Shaun of the Dead" used the same conceit to symbolize office work.
Everybody remembers Janet Leigh's death scene in the classic slasher flick. What they forget, though, is why she ended up in the Bates Motel in the first place: She was on the run after stealing a small fortune from her employer. As for the motel itself, it was facing hard times because the recently-unveiled highway drove away business.
For a funnier take on a similar story, you might try taking a peek at "Auntie Lee's Meat Pies", which manages to brilliantly combine cannibalism, serial murder and Pat Morita.
Forget ghosts and ghouls: Few things are scarier than asking the bank for a loan. But in this Sam Raimi-directed flick, the tables are turned as a young loan officer turns a deaf ear to a seemingly feeble gypsy woman trying to borrow some money. Needless to say, all hell breaks loose.
On the surface, this 1981 classic is the tale of super-evolved wolves preying on New Yorkers. Scratch a little deeper, though, and another story emerges: The tale of wealthy Manhattanites preying on poor people in the Bronx, then being themselves preyed upon by wolves. In other words, NYC in the 1970s was truly a dog-eat-dog world.
If you want another fix or two of class-based horror, check out "CHUD" and "Street Trash," both of explore the plight of New York's invisible homeless.
Sure, Stanley Kubrick's 1980 horror film is all about telepathic kids and haunted houses and elevators full of blood. But one of the first bits of fear and tension occurs in the hotel manager's office, where Jack Torrance, a recovering alcoholic who can't seem to hold onto a job, finds himself forced to beg for a gig as the winter caretaker of a resort hotel. Anybody who remembers the travails of searching for a job will recognize this truth: The nightmare isn't being trapped a haunted house -- it's having to grovel to get a job in a haunted house.
Angus Scrimm's Tall Man character is one of the more unnerving monsters in filmland: Not only does he steal the bodies of the dead, but he also steals the souls of towns. As Reggie and Mike travel cross country, it isn't hard to pick up his trail -- they just have to look for boarded-up stores, deserted streets and abandoned homes. Of course, for 1988 audiences facing the effects of outsourcing, the monster emptying out their towns was a little harder to explain.
For another take on the "monsters-as-suburban-economics" metaphor, take a peek at "Poltergeist." Between the unethical developer who didn't bother to relcoate a graveyard and the mindless TV that saps your soul, the Tobe Hooper classic manages to hit a host of cultural touchstones!
A whole subset of horror films is dedicated to rural families living off the land ... and the miserable travelers who happen across their path. It isn't hard to see why it might be an attractive premise: After all, there's no lack of people clinging to the bottom rung of the economic ladder, and it isn't hard to imagine that they may be one paycheck away from having to make their own clothes and hunt their own meat. What happens afterward ... well, that's where it gets really ugly.
If you want even more tips on living off the land (and curious teenagers), you might check out "The Hills Have Eyes," "Wolf Creek" and "Mother's Day." For a funny take on the same premise, try "Tucker and Dale Versus Evil."