Yesterday was Labor Day and the unofficial end of summer. Scores of students headed back to school in recent weeks, and many of those students are college students. In the spirit of “back to school,” we’ll be focusing on money and kids this month, and we’re kicking it off with a few thoughts on student loans.
Many people would classify student loans as “good debt” because it allows someone who otherwise couldn’t afford an education to go to college. On the spectrum of “good debt” vs. “bad debt”, student loans fall somewhere between a mortgage (“good debt”) and credit card debt (“bad debt”). I am all for getting a college education, and even took out some student loans myself, but oftentimes students end up taking on more debt than they should.
Here are three things you can do for your son or daughter who is off to college to minimize the student debt burden that plagues far too many young working adults today:
- Community College. Consider having your child start their higher level education at a community college. Attending a local community college for two years can cut the cost of a four-year university education in half. Community colleges also typically offer programs that allow for easy transfer to a four-year university after earning an associate degree.
- Free Money. If your son or daughter is accepted into a more expensive school, then put in the extra effort to apply for as many grants and scholarships as possible. Having $100,000+ of debt coming out of college is not the best starting point of a career. Minimize the expenses as much as possible with the resources available to you. If you can’t obtain scholarships or grants (or pay for that prestigious school out of pocket) then ask yourself if it is worth the extra money compared to your local State university.
- Don’t Use Student Loans for Pizza. If you must take out student loans, then only borrow enough for tuition and/or books. Don’t use loans for living expenses such as food, housing, transportation, etc. Find a way to cover these expenses without debt. As a parent you could help your son or daughter by paying some of those expenses, and having them contribute by working a part-time job. The bonus of working while in college is that it builds a more well-rounded student, which is an advantage for the freshly minted graduate looking for a career-oriented job.
The decisions you and your kids make about college today will affect them financially for the rest of their lives. Take the time to weigh your options in order to minimize the amount of debt your children will have to pay at the start of their career. Debt, when used properly, can allow you to do things that enhance your life. If used improperly, it can cause a lifetime of financial stress. What are your thoughts on student loans? Please let us know in the comments section below or on our Facebook or Twitter page.
- Published in Debt