Help your grand kids avoid student debt. It's about more than money --- they need a plan.
By JULIA ANDERSON
The numbers are shocking.
The average cost of attending a four-year public university in the U.S. -- tuition, fees, room and board -- in the 2018-19 school year was $21,370. At out-of-state universities the cost jumps to $37,430. (That's about $85,500-$149,000 over four years.)
These estimates don’t include expenses such as school supplies, textbooks and transportation, says US News & World Report in a recent article.
The costs are intimidating for students, their parents and grandparents. Tuition costs alone at public institutions have soared 213 percent in the past 30 years.
Then comes the second problem – student debt. Borrowing to pay for education beyond high school has ensnared 44 million people who now owe a combined $1.52 trillion in student debt. Average debt owed per student is $38,400.
According to Forbes magazine, it is taking 18 years on average to pay off these loans. Kids will be in their 40s before becoming (student) debt free. This is a huge problem not just for the borrowers, but for the U.S. economy because debt keeps young people from buying cars, buying houses, moving out or having children.
What can grandparents do to keep their children and grandchildren from falling into the student debt trap?
Plenty, says Jennifer Satalino, director of The College Place, who appeared on Smart Money, my public television show, recently. Her organization helps people pursue undergraduate education through counseling, financial aid and scholarships.
“It comes down to talking about all this early on,” Satalino said. “Families need to lay out a plan that includes saving for school, a budgeting strategy that makes sense and being smart about getting those college credits. It may mean living at home and working part-time,” she said. “Students don’t have to rush.”
She said, it also means understanding student debt – types of loans, avoiding bad loans and bad interest rates, understanding who services them, repayment options and costs over time.
How to avoid student debt:
Better yet, avoiding student debt in the first place. It can be done. Here’s how parents and grandparents can help:
Set up a college savings plan, early. Some families start tax-deferred 529 savings plans before their kids are even born. Grandparents also can set up 529s.
If your student decides to take on a student debt loan, here are the basics:
Research starting salaries in the field they plan to pursue. Will their starting income support debt repayment?
Ask what can they afford to repay?
Understand the terms of the loan.
Make payments on time.
Keep in touch with your loan servicers who can provide options to keep your loan in good standing.
Most-regretted college majors: SOURCE: CNBC.com, ZipRecruiter survey
Major Leading reason for regret
English & foreign languages Impractical, limited job opportunities
Biological and physical sciences Advanced degrees or licenses often required
Education Low pay and job satisfaction, limited opportunities
Social sciences & law Too general, impractical, hard to find a job
Communications Too general
Least regretted college majors
Computer science & mathematics Can be stressful
Business Too general
Engineering Best jobs require advanced degrees
Health administration & assisting Lower job satisfaction
Health sciences & technology Lower job satisfaction
Bottom Line: Grandparents can help their grandchildren avoid student debt, layout a strategy for getting a college education and landing a good job.
How? By advising them to take it slowly, by keeping expenses at a minimum and staying the course. This requires starting the conversation, early. Like now!!
5 Ways to Avoid Student Loans, click here
5 Ways to Avoid Drowning in Student Loan Debt, click here.
The College Place – Oregon, click here.
Oregon Promise, click here
The 5 college majors American students most regret picking, click here
Student Debt Relief, click here
Federal Student Aid, click here
How to Pay Off Students Loans, click here
4 Best Ways to Pay Off Student Loans, click here
I meet women all the time who face job and money transitions and who want to do them right. It’s about building confidence and taking charge of the future. This is your money. No one cares more than you do!
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