Friday, October 23, 2009

Student Loans: Parents signing on for them?

Think differently about how you can handle this so that neither you nor your child gets caught in a downward spiral of financial doom. If you do not have the resources to cover a college education for your child:

• Make sure your child is contributing at least something to their education and expect them to sacrifice for it.

• Exhaust all options for getting general education requirements out of the way through local campuses.

• Involve your child in a forthright, honest dialogue about their major and the job market expectations. This includes all options: including the value in a degree in their field of “interest” but also in a non-existent job market; “switching majors” mid-stream (expensive and delays graduation) and who will repay loans if the student does not graduate.

• Finally: have a frank discussion about exactly where the money for those student loans will be spent. That may mean no spring breaks in exotic locations, buying electronic equipment for entertainment, eating in restaurants regularly or using the money for anything else but school and basic living expenses.

It will not come as a shock to those of us working with budgeting and finances to hear even stricter recommendations coming down. We assume that college is a four or five year plan for our child. But with fewer dollars available to fund educations, we may be helping our children with other options, such as delaying college for a while and working, living at home to save on expenses or simply taking longer to complete the degree.

Holding your child accountable for spending habits is part of being a good parent. You give them a great gift when you do so by allowing them to experience doing without (it doesn’t hurt your child) and the reward of being able to plan for a future that may have less overwhelming debt.

One more thing: don’t rule out local technical colleges to obtain certifications or degrees that can provide good employment. Even if it’s not in the field you’ve always dreamed about, it can offer you critical job skills, a time to save money as well as offer life experiences that will prove invaluable in the future.

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