How to Help Your Kids with Student DebtJul 31, 2018
You’ve helped them with homework and essays, watched them as they walked across the stage to receive their high school diploma and now it will soon be time to send them off to college or university. While it’s certainly an exciting time, many parents worry about helping their children with the high costs of higher education.
Helping your kids with student debt is the focus of our podcast. Here’s what our Licensed Insolvency Trustees (LITs) had to say:
Remember your own financial goals
Although parents always want the best for their kids, our Licensed Insolvency Trustees emphasized the importance of still being mindful of your own financial goals, responsibilities and obligations. Recent stats show that many parents have put off reducing their debt load, paying off their mortgage and even retiring in order to help their children with the costs of post-secondary education. Although well intentioned, this can be problematic as it may mean that parents may end up struggling managing their goals and may end to debt as a result.
As suggested in our podcast, it’s best to be open with your kids about your ability to help them financially and keep the lines of communication open so that he or she understands and respects your need to maintain your own financial health.
Help prepare your kids
While you may not be able to help your child financially, you do play a big role in helping them prepare to manage their finances independently. As suggested by our LIT’s, it’s important to ensure that your child understands the importance of budgeting and spending within their means before heading off to school.
In addition, understanding their loan options can also be confusing. Take the time to sit down with them and help them look at the various loans available and ensure that your child understands how a line of credit or student loan works as well as the repayment process. For real good dose of reality, have them run the numbers through an online debt calculator so they get a sense of how long it takes to repay a loan and how much interest is charged over time.
Not only can you help your child become financially responsible, you can also help them seek opportunities to lessen the financial burden of post-secondary education. As suggested by our LIT’s, encourage your child to seek a part-time job during their study period in order to help with the costs of school. You can also help them research and look for scholarships or bursaries opportunity that may be available through their college or university.
There are many ways to help your child with student debt. How do you plan to help while still being mindful of your own financial obligations and goals?