How to help your child avoid the student loan nightmare
Your kids have been accepted into college! That’s good news. Now you can take a deep breath, knowing that your kids are well on the right track to success, right? College is a big step for everyone and higher education is even more essential now than ever. However, we cannot forget that it is only the beginning of their journey. A shocking fact is that over 70% of students graduate with debt. More discouragingly, the average debt is $33,000 for each graduating student of 2014. It is not a good way to start off their life, isn’t it? As parents, what can you do to help your child prepare for his or her finances in college?
Teach them about finances
Don’t wait until the night before they leave for college. Start teaching them at a young age about the value of money and how every debt requires payment. For many families, taking out a student loan is a must if their children want to go to college.
However, the less you borrow, the easier and quicker you can pay off. Many students did not worry about the loan until they graduate. Many rely on student loan for things like text books, food, or even entertainment expenses instead of finding a job to support themselves. The best thing you can give your child as parents is the right mindset. So start preparing them as soon as you can.
Utilize all resources available
Most often, people assume that financial aid and scholarship is hard to come by. It is not true. Each college, each department, and many other associations offer scholarship and financial aid to students. Don’t even disregard a scholarship just because it doesn’t sound like much. Even if it is only $500 or $1000, it can pay for your child’s textbook or half a meal plan, and so on.
So encourage your child to apply to as many scholarships as she can find. Some parents also assume that their kids need to have excellent academic score in high school in order to qualify for scholarship. However, you never know what is good enough until you check. There are also scholarship awarded based on a child’s skills and talents in art, music, or sports. Also look for diversity scholarships, which are often awarded to students of minority background, such as African American, Hispanic, Asian, and so on.
Considering more affordable options
Instead of paying 4 year tuition at an expensive university, many students choose to spend the first two years at a community college. They can also enroll in the university but take classes at a community college for credit. Often tuition there is much lower and two year worth of credits can save them a big chunk of money.
At the end, they will graduate with the same degree, and become part of the same alumni group. Therefore, do encourage your child to explore all options for the most financially sound one.
Start making payment as soon as possible
The thing about loans is that they come with interest, and interest grows. So the sooner you start making payment, the less you have to pay overall. Plus, being up to date with the payment can help your child building a good credit history. Therefore, don’t let them ignore the debt until it’s too late.