Student loans leave so many in debt
Paying for college or trade school can be tough. As a result, parents and students whose financial plan did not allow them to save enough money to cover costs have had to seek other options for making tuition payments. These options sometimes include taking out student loans through government programs or private lenders.
Student loan debt can become unwieldy over time, particularly if the borrower is unable to find a high-paying job after graduation. While government student loans offer many different repayment options, including plans that base monthly payment amounts on the borrower’s current income, private loans may not offer such an option.
In addition, it can be difficult to discharge student loan debt, government or private, in bankruptcy. Doing so requires being able to prove that one cannot reasonably be expected to make payments while maintaining a minimum standard of living.
Alternatives to Loans
Parents who wish to avoid having to use student loans to pay for their child’s schooling may wish to develop an educational financial plan. This may include making use of special investment accounts such as the 529 College Savings Plan or purchasing life insurance policies that build cash value over time.
Students can also do their part by seeking out scholarships and grants, which often covers a significant amount of educational costs. Other options include choosing to attend a community college for the first two years of college or going to school close to home so as to avoid the cost of room and board.
While it is true that a student loan can be an investment in one’s future financial success, starting out life in debt is challenging. Getting expert help with college financial planning is one way that parents can help their kids avoid the loan trap and start adulthood on the right foot.