Mom helps daughter research college loans

Planning for college includes the possible reality of your child taking on student loan debt. Help your child understand the impact of that decision early, and the benefits of keeping borrowing for college in check. Start your family discussion by keeping in mind plans for how to repay student loans.

The reality of college costs

If you’ve been saving for this moment with a Coverdell Education Savings Account or a state-sponsored 529 College Savings Plan and have enough saved for your child’s college tuition, move to the head of the class. However, if your savings aren’t enough, there’s a strong likelihood your child will need a student loan to cover college costs, since in most cases, the price of higher education has risen over the years.

Find the lowest interest rate option

With an eye toward affordable repayment, work with your student to find loans with the lowest interest rates. Federal student loan rates are often lower and offer more flexible repayment plans than private loans. Begin by creating an account for both the parent and the student borrower. If necessary, you can search for private loans at the Consumer Financial Protection Bureau website.

Keep borrowing to a minimum

Working together with your child, begin talking about an action plan for student loan repayment options as early as possible. Do the math together, calculating future monthly loan payments using the federal student loan repayment calculator.

With monthly student loan payments sometimes being larger than rent or a car payment, your student will want to think seriously about reducing the amount of debt to accrue. The less owed, the less your graduate will need to repay.

Encourage your child to seek out part-time work

Your college freshman may not be ready for the corner office, but savings from a part-time job can help with college expenses. Some employers offer tuition reimbursement to help reduce out-of-pocket school costs. If your student plans to work part-time while in school, finding a job that pays wages and pays for school could help reduce the amount of loan money that will need to be repaid. The law allows for an employer to contribute up to $5,250 as a reimbursable college expense.

Get busy with budgeting

Two of the best ways your student can keep future loan debt in check is to budget successfully for monthly payments and secure the income to make them on time each month. The ability to manage money will play a large role later as students calculate exactly how much is owed and what they eventually can afford to pay.

When beginning to repay federal student loans, you or your child may select or be assigned a repayment plan. As financial circumstances change — hopefully for the better — your graduate can change repayment plans at any time online for free using the government’s student loan repayment calculator.

College plus loans

The end of college marks the beginning of the rest of your child’s life as an independent adult. It’s possible this next phase will involve repaying student loans. Start the conversation about borrowing sooner rather than later.

The advice provided is for informational purposes only.

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