Most of us still remember what it’s like, being on the verge of graduating from high school and contemplating the future ahead. It is both an exhilarating and frightening time, leaving us perched on the precipice of change, adulthood, and independence. This is also a time that sent most of us straight to the financial aid office, wondering what our options were for getting help; after all, without a loan college might not have happened at all. You may also remember signing on the dotted line without too much worry, until later when the payments came due.
All these concerns and emotions are amplified many years later as you watch your own child go down the same path. Leaving high school and moving on to college can be a make-it or break-it time for many young adults as they set out with high hopes for getting an education and ultimately, launching a profitable career. Because of that, as parents we worry. A lot. And with the student loan crisis constantly in the news today, we have more information to consider and to be concerned about.
The student loan debt is currently at $1.4 trillion and growing among more than 44 million borrowers. Many young people today are graduating and having trouble coping with monthly payments that may on average be around $350. For students or graduates just entering the ‘real world,’ this can be crippling. Because of that, more education about education costs is required.
Here Are Five Things to Tell Your Kids About Student Loans Before Sending Them off Into That Big Bad World:
- Use all the resources being made available to you at both your high school and college financial aid offices. Speak to your guidance counselors, and get to know them well! Student loans are a serious choice and commitment, and it is important to gain wisdom from those who most likely have many years of experience guiding students.
- Explore and use all the freebies possible. You may be able to qualify for scholarships and grants you were not even aware of. Sometimes these may be available at schools that don’t have quite the status you were looking for, but you will be able to get a lot more bang for your buck in terms of education. Consider what you really want out of the future, and keep in mind how hard it may be to pay back a student loan the size of a mortgage–while you still must budget in housing and all the other bills too.
- If you decide to take out student loans, use as much federal funding as possible. This allows you a better interest rate, usually, along with deferment of payment until you leave school. Private loans may be required on top of federal loans if you still do not have enough for a required program (especially graduate school), but they generally offer a variable interest rate, may require payments to start right away, and often little flexibility is given later for repayment options if you are experiencing financial distress.
- Keep in mind that if you drop out, you are still on the line for those student loans. They don’t go away, and not only will you will be challenged career-wise but you will be strapped down right out of the gate with a monthly payment. If you want to drop out of a four-year school, consider attending a technical school where you can learn a trade and have your loans deferred until graduation.
- If you have the funds, start paying down those low-interest loans as soon as possible so you are not living with them for years on end. Also, understand your repayment options. This is information you should be able to gain in-depth from counselors at school. Listen to what they say as you may not find competent help from loan servicers later. Make sure you have a comprehensive understanding of how repayment works, as well as deferment and forbearance programs. Ask about alternative repayment programs that are available as well as forgiveness programs for many graduates entering careers in different areas, from medicine to teaching.
While it is important for all student loan borrowers to understand what they are getting into from the beginning and to have all the facts, it is just as important to understand that the world is not ending if they begin having trouble making those sizeable payments later. There are options, and our legal team at Fitzgerald & Campbell, APLC has decades of experience in helping clients to explore their financial options. Let us review your case and help you decide the best route. We are here to help you!