If your teen is still in high school and they plan on going to college, then now is the time to start talking to them about student loan debt. Student loan debt is something that only a few college students manage to avoid. There are several things that you will need to tell your kids about student loan debt.
Tell Them About the Scary Student Loan Stats
The average Millennial is spending 20 percent of their income on their student loan payments. Not only are Millennials spending a large chunk of their income on student loans but they are also delaying life milestones because of their debt. This includes things such as getting married or buying a house.
You should let your teen know about these scary stats. You should let them know that student loan debt could limit your freedom.
Talk To Them About Smart Financial Choices
Let your teen know that there are other ways to pay for college besides taking out a student loan. Encourage your child to apply for scholarships. You should also encourage them to get a part-time job and save any money that they receive.
Talk To Them About Federal Student Loans
If your teen has to take out student loans, then it is best to stick to the federal ones. Federal student loans give you more flexibility. For example, you can apply for an income-based repayment plan. You may also be able to get student loan forgiveness.
Tell Them How Much You Will Help Them
You will spend at least 18 years caring for your child. That is why your teen may assume that you will pay for their college. You should let your teen know ahead of time about how much you will be helping them.
Tell Them to Not Use The Whole Loan
Your child may get $40,000 in student loans. However, that does not mean that they have to use the whole amount. Inform them that they should try to live as frugally as possible. Living at home can help your student save money. They should also avoid using student loans to pay bills.
Tell Them to Make Loan Payments in College
Students get a six-month grace period after graduation. However, it is best to start repaying the student loans while college. This will help your child save a lot of money.