Graduate Mom And Dad

Source: Tulane Public Relations via Flickr.

These days, racking up student debt is almost a rite of passage for those who attend college. Americans currently owe a collective $1 trillion for the privilege of getting those diplomas, and that number keeps climbing year after year. The Project on Student Debt reports that 69% of 2014 college graduates took out loans to finance their education, borrowing an average of almost $29,000 in total. 

For many students, borrowing money is the only way to cover the ever-rising cost of tuition without help from the parents. But while many parents are unable to pay for their kids' college expenses up front, a great number are more than willing to help pay off their children's debt. In a recent Discover Student Loans survey, 52% of parents said they're likely to help their children repay their college loans, while 24% say that's "very likely." 

Although helping your children repay their college loans is noble in theory, it may be a terrible idea in practice. Here's why.

1. You should be focusing on retirement savings
If you have kids who have already graduated from college, then there's a good chance you're already in or near your 50s, which means retirement isn't all that far away. And that means now is the time to sock away every penny you possibly can while you still have a number of working years ahead of you. If you're 50 or older, you can make an annual $6,000 catch-up contribution to your 401(k) on top of the general $18,000 limit, and you can throw an extra $1,000 into your IRA on top of the standard $5,500. While you may feel obligated to use any extra money you have to help pay down your children's college debt, it's far more important to allocate that money to retirement -- because Social Security checks aside, once you stop working, your primary source of income will be whatever savings you've managed to build.

And remember: Although no one wants to see their children burdened by debt, there's no such thing as a "retirement loan," so you'll need to rely on your own savings to get by when you leave the workforce.

2. Your kids' earning potential will climb, but yours may not
If your children are just starting out in their careers, then they may not be bringing in the big bucks just yet, but over time, their careers will advance, and their salaries will likely grow. At this point in your career, however, your salary probably has much less room to grow, and once you reach retirement, your salary will be non-existent. In other words, just because you're the higher earner right now doesn't mean that'll be the case a few years down the line -- which means your kids are actually in a better position to be making those monthly loan payments than you are.

3. Repaying college loans helps build credit
There's an upside to having your children pay back their own loans: Doing so will help them build credit. By the time most people finish college, their credit history is minor at best. Repaying student loans responsibly is a great way to build credit so that when the time comes to apply for a mortgage or car loan, for example, your kids are more likely to get approved -- and at a favorable rate. If your children make their loan payments in full and on time month after month, their payments will be recorded as such on an ongoing basis, which will give their credit scores a boost.

As a parent, it's natural to want only the best for your children. Though it might pain you to watch your kids postpone major life goals like getting married or buying a house to pay off their student debt, putting yourself in a precarious financial situation is by no means a better solution. In an ideal world, college would be more affordable and scholarships and grants would be more abundant. But in the absence of that, student loans are the next best thing, and if your kids wind up among the many repaying their debt on their own, they'll be stronger for it in the long run.

Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.