Students who don't have a personal stake in their debt are less likely to develop money management skills as adults. That's why experts like Chanel Greene, who manages Peirce College's financial office, recommend sharing the debt load. Having children take responsibility for a small part of their debt provides a strong incentive to manage costs. You can then introduce other money-saving practices, "The Deseret News" notes, such as encouraging students to make interest payments while they're still in school.
There's nothing wrong with discussing the financial implications of a child's college choice. You might suggest starting out at a community college, which costs half as much as a four-year institution, before transferring to a big name school. You can also help identify lower-ranked colleges that provide sound programs and better financial aid options. In an article in "The Deseret News," business student Isaac Hess cited both factors in making the University of Iowa his graduate school destination, which enabled him to avoid borrowing.
Careful identification of a student's financial options reduces his chance of picking up questionable borrowing or spending habits. Too many parents, for example, believe their income is too high for financial aid. Filling out the Free Application for Federal Student Aid form is essential to getting grants and scholarships, which don't have to be paid back. Parents can also consult various online resources, such as American Student Assistance, a nonprofit company that helps students manage educational debt.
Seventy percent of college students graduate with $35,000 or more in debt, which they either fuel with high-interest credit cards or excessive borrowing. All too often students underestimate the ease of landing a high-paying job to solve this problem. Parents should stress the importance of choosing a major wisely, and researching the job market, the CollegeXpress website advises. You can help a child start this process before he shows up for classes, which will make him more cautious about taking on an unrealistic debt burden.
Students can receive refunds if they don't use up their entire loan amount during a certain financial aid period. Encourage children to return the unused portion, instead of treating it as free money for trips or non-educational expenses. Every unpaid dollar only adds to a student's debt burden, Greene notes in a "U.S. News & World Report" February 2013 article, "11 Ways Parents Can Help Kids Cut College Debt Now." The sooner students understand this concept, the better.