Teaching Your Children How To Manage Their College Debt May Be The Best Route To Take

Student loans are a serious undertaking, and many parents wonder if they should take out loans on behalf of their child or else allow the student to have primary responsibility for the loans. Many parents wish that they could pay for their children's education in full, but the rising costs of education often make this prohibitive. As a parent, should you foot the bill and the debt for your child's education? You may be surprised to hear that you may be doing more good for your child if you let him or her take responsibility for college funding.

As a parent encouraging your child to be responsible for his or her student loans, your role in your son or daughter's college funding is not without risk. After all, you will likely serve as a co-signer for any loans your child takes out. This means that while you will not be the primary loan-holder, you still assume partial responsibility for the loans and will be adversely affected if your child does not handle her or his loans in a responsible manner. You will want to be sure that your child is truly serious about college and is able to take on debt responsibly.

Making it clear that your child will be financially responsible for a college education will likely influence him or her to make a smarter college choice. After all, when mom or dad is footing the bill, a student may opt to attend a costly private college. If students are forced to take out loans in their own names, however, they are likely to select a more economical college that meets their needs, such as a state school.

Managing his or her finances independently will help your child to learn responsibility. After all, handling money is something every student should learn, and college is certainly the time to instill a sense of fiscal accountability in your child. By managing student loans and figuring out a college funding plan with only minimal assistance from you, your child is learning valuable money-managing skills that will benefit her or him in the future.

Paying back the student loans post-graduation is an important lesson in interest, repayment plans, and budgeting carefully in order to afford payments. Your child will learn a lot from having to navigate the terms of his or her student loan debt.

Furthermore, having loans will compel your son or daughter to have a goal in during college, as well as a deadline for finding employment upon graduating. After all, those student loans will come due before you know it. Without the worry of student loan debt hanging over their heads, many students lack focus during college. They are often in no hurry to graduate and grow up, unless given a very compelling reason to do so.

Students who are held financially responsible for their education also tend to do better in college because they are aware of the monetary value of their education. They get better grades and have fewer absences, since they are paying for every course on their own.

As a parent, it is hard to know when to step in and help your child or when to insist that he or she take responsibility in regards to debt and financial aid options. When it comes to student loan debt, taking the "tough love" stance is a good way of instilling ownership and responsibility in your children as they pursue college or online school.

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