Should Personal Loans be Used to Fund Retirement or College?

The Future: Retirement or College?

Personal loans for funding college or retirement? Think carefully. (Photo:

Personal loans for funding college or retirement? Think carefully. (Photo:

One key question Americans are asking themselves is whether to use personal loans as a means of funding retirement or college funds. There is a careful balance between choosing to put hard-earned money into a person’s long-term future, or their children’s. Senior financial advisor Evelyn Dinkins recently reported on why consumers should be looking to their own retirement funds before their children’s college account.

An Expert Sounds Off

Dinkins stated that there are some very important points to saving for retirement religiously. First of all, retirement is funded one way: consumers resolutely saving. With the state of Medicare and Social Security, ancillary funding is most likely not going to be available for much of the future.  Consumers are most likely reaping the last benefits of these programs now; future generations will be on their own. For this reason alone, it’s important to realize that saving today is what’s going to take care of the average American’s future.

In addition, Dinkins spoke on how retirement funding is pretty much a fixed cost. If a consumer knows their cost of living and can project inflation somewhat accurately, they can pinpoint how much they need to save for a comfortable retirement. This amount is non-negotiable, unlike a college fund. Plus it’s important to take stock of funds at various times throughout the career to reassess if retirement fund goals are met, or if more savings need to go into the account.

Finally, with employers willing to match 401(k) contributions, it benefits all employees to take advantage of the extra money for their futures. Dinkins subscribes to the philosophy that people should “fully save for retirement and if there’s money left over, then save for education.”

On the Other Hand, There’s College

College has a good number of ways to be funded. Personal loans, scholarships, grants, and part-time jobs can all contribute to a college fund. For example, if push came to shove, a student in Florida could probably search for personal loans Tampa and get started at school, while looking for additional funding sources. Plus there are ways to alter this cost by going to a community college for the first two years of an education or live at home for the duration of college rather than dorm living. Schools can be chosen for a specific budget and other cutbacks can be used to save money.

How to Face Reality

Dinkins states that when a child is about 16, parents should have a serious discussion about their college future. Parents need to lay out specific financial guidelines, making it a point to communicate the total amount they can contribute. Children should understand that anything above and beyond the total parental contribution will need to be funded by their own efforts. Even if parents are able to totally fund a college experience, children should be aware of the total cost. Dinkins explained college funding to her own child this way: “My daughter looked at one particular school and I just had to say that can’t be on your list unless you want to come out with a massive student loan.”

Retirement Funding is a Priority

In the end, the temporary cost of college can be funded with a wide variety of tools such as personal loans, scholarships and grants. However, retirement funding is going to be a result of proactive savings. If their retirement years aren’t prioritized, then retirement may need to be postponed indefinitely. The bottom line is that Americans need to make sure their retirement futures are secure prior to contributing to any other funds.

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