What Every Parent Must Know About Student Loans
As you know by now, my most important priority is to pay for my son’s education without him taking out any student loans. In my home I discuss some issues I write about and also get my son involved in some conversations, but at fourteen he is still too young to understand the consequences that a student loan can have on his life. That is perfectly OK with me because as we talk he is getting educated.
I just found out a few days ago how ignorant some people are about their finances and of the consequences of their actions. Recently a study was conducted that found that borrowers are taking out massive amounts of student loan debt and they do not understand what will wait for them once they graduate. This poll consisted of Americans older than 18 who took out student loans.
Half of them had no clue what their financial responsibility would be and did not know how much they would have to pay every month after graduation. Parents and students need to be educated about what they are getting into when they take out a student loan, and what their future responsibilities will be.
People who buy a home or a car shop to see what the competition has to offer and who offers the best price. For whatever reason most people do not do that when they are shopping for student loans. It scares me to think people are so irresponsible.
Before a person takes out a student loan, they should find out if they qualify for any federal grants. Also there is a difference between a federal loan and a private loan. Meaning that there is some research required before taking out a loan to make sure you are getting the best deal possible.
Parents need to be involved with their children’s finances into their early twenties at the minimum, to ensure that they are not making any simple mistakes they will live to regret for many years.
Our children need to be taught at an early age about money and finances. I’m talking about simple math, basic budgeting and saving for a rainy day. I have to admit, that my parents were too busy working to talk about finances, but I have learned from my mistakes and do not want my son to experience the same difficulties I went through.
My parents were immigrants who worked a week after they landed in America. They were hard working and frugal and we had everything we ever needed. They were concerned about my education and did not want me getting involved in the wrong crowd. They sent me to a private school in Europe for three years which I wasn’t too happy about, but things worked out. College was never on my parents mind and I never thought about it.
When I was in high school, college was not as expensive as it is today, and it never crossed my mind. I ended up joining the U.S. Army shortly after high school, and didn’t know what the G.I. Bill was.
After getting out of the Army, I got a job in New York and worked for a year before I was off to Europe on vacation. When I got back, I quit my job and hung out with my friends from high school that went to college. They kept telling me to go to the Veterans Office and enroll in college because for me it was free.
I was lucky, and went back to college and the G.I. Bill paid for it. It was one of the smartest things I ever did and didn’t know it. My son will not have that opportunity available to him so we have to make some plans and take action to achieve our goal.
Before I end this post, I want to bring to your attention that not only is a student loan an issue but so is retirement. Many parents are scraping the funds together for their kids’ college and often putting their retirement into jeopardy. Some graduates move home after college and that is an extra financial burden that parents have to deal with. Most times it will have some additional negative financial consequences.
There are four links attached to this article and I highly recommend that you read them. It’s all about the money, and you need to be prepared to avoid unexpected surprises. There are many options available but some research is necessary as is a side hustle or two that will bring in the money.
Goulash