With student debt continually rising, it is important to come up with a game plan. Many recent high school graduates don’t actually understand how much college costs and what their student debt will be once they are finished. Help your child learn about student debt and come up with a plan to pay it off. Forming good money habits early on will help establish these habits for life. Take a look at some current statistics of student loan borrowing and repayment in the United States HERE.
The first step is calculating the costs. Consider how much factors such as room and board, books, tuition, etc. will cost. Compare these costs to the “free money”, such as scholarships and grants, your student is earning. If you need to borrow money, consider this as well. It is recommended that students choose to apply for federal loans before private loans because federal loans typically have lower interest rates.
Also, consider how much your student’s annual starting salary will be once they graduate. Compare it with the total debt of what they will have post graduation.
Students should begin tracking their spending as soon as possible to help learn how to manage money. Interest accrues on student loans, so having your child help pay the interest loans while in college can help them get used to paying off student debt, and reduce the overall payment. Have them keep in mind what costs you have right now and costs that they may have in the future.
Break down how much the monthly payments will be. Be aware of how much you borrowed, what lender you borrowed from, and how much your payment will be.
Which loans should you pay off first? Prioritize your loans so that you pay off the ones with a higher interest rate first.
The Family Credit Union is here to help with your student loans! We offer a Smart Option Student Loan, by Sallie May, that is an ideal situation to help you pay for college expenses that are not covered by scholarships and federal loans. Feel free to contact us today and we will be happy to answer any questions that your have about our private student loan program.