Student loans are a great way for individuals to get some help supporting themselves whilst they work on their higher education. They’re also a good introduction to financial responsibility, and something of a primer on the way things like loans and APRs work — things any adult will need to know once they start living on their own. Most college students, however much we’d like them to be, are simply still not completely independent of their parents. Financial ties can be especially hard to cut, and what’s more is that certain student loans will even require the parent as a cosigner.
Clearly, there’s a lot of information with which you should be familiar as a parent before your college-age child goes about taking out a student loan. Being involved in your child’s first college loan is an important thing, and can help make sure that your youngster gets the most he can out of a loan. It will also help make sure that the terms of the loan are sensible.
One of the main reasons parents need to be involved in their kids’ student loans is that the terms tend to be a little outrageous. As you’re probably more experienced at navigating things like loan terms and conditions, you should make sure to be looking over your college student’s shoulder as he or she applies for the right loan to help with higher education.
Student loans have a tendency to be rather expensive, and a seemingly small loan of five to 10 thousand dollars can wind up taking well into your child’s adult years to pay back. This is obviously a situation that you want to avoid, so try not to take out a huge sum of money that you don’t think you’ll be able to pay back. Also, set yourself up with a minimum payment situation that won’t see your student paying an exorbitant amount of money each month.
A nice thing about student loans is that they don’t go into repayment until approximately six months after graduation in most cases. This means that your student has plenty of time to save up and make sure that there’s money put away to start paying this loan back when the time comes. If you’ve cosigned on the loan, you certainly don’t want your student to default on it; this situation could have very negative implications on your credit.
Whether your child is attending a full, four-year university or attending online MBA schools, there are a variety of forms of funding available. Grants, scholarships, and loans are available for many students, and in most cases all it takes is some diligent searching. Key to any loan is making sure you make your payments in full and on time. If you can practice some restraint and take out student loans that are sensible and easily repaid then you’ll be able to get the most out of your education.
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I’ve been working in the financial industry for many years, and students loans are a great thing in helping to pay for your education. In Canada, you also get tax breaks on interests paid on student loans. But I can’t stress how important it is not to default on your student loans. Late or missed payment will have a serious negative impact on your credit score and can affect you for many years. Thanks for the post. -Pat
Pat Drummond recently posted..Free Credit Report Canada: 3 simple ways to get a free report and score