The news is full of reports about the crushing debt that many of today’s students are facing. With tuition costs on the rise, this problem is likely to get worse. But there are some practical ways you can reduce your family’s student loan debt.
- Only apply for a private loan as a last resort. First, complete the FAFSA (Free Application for Federal Student Aid) to apply for lower interest government loans that have much better terms. Also, your child may want to request work-study opportunities when they complete the FAFSA.
- Explore scholarship and grant opportunities. There are thousands of different types of scholarships and grants available through the federal and state government, as well as colleges, employers, community organizations, religious groups, and private institutions. Tip: Large scholarships tend to be very competitive, but you can often cover a lot of tuition and other college expenses by applying for numerous smaller scholarships.
- Teach your child how to manage their money. It’s their first time being independent, so many students struggle with staying on top of financial responsibilities. Teaching them the basics of budgeting and saving will go a long way to preventing problems in the future. It also can help them to get a job! Many large employers run background checks and credit scores on applicants. Being responsible with money may help them stand out from their classmates in getting hired.
- Resist the lure of credit cards. There are plenty of credit card companies who are marketing to students. Caution your child against getting a credit card and incurring high interest rates. If they do have one card, be sure that they pay them off on time and in full each month.
- Start an emergency fund. It’s easy for students to become overwhelmed when their car breaks down or they face an unexpected expense. Be sure they have a little money tucked away to cover these surprises.