Back to school advertising seems to start the day after the kids get off of school, but no matter when it starts, the reality is that the cost of education today can be quite high.
Clothes, supplies and technology are all needed to setup the returning student for success. If that student is heading off for post-secondary schooling at college or university, the demands are going to be large – and often unexpected. Items such as tablets and laptops that used to be “nice to haves“, are now expected, and in many cases, are required resources for students. This piles additional costs on top of already overwhelming tuition fees.
As a parent, you don’t want to see your child handicapped by not providing them with what they need to succeed. Most parents will make many sacrifices to see their children set up for school. Paying for all of these things can be a challenge in addition to trying to help your child avoid student loan debt. Here are four tips to prepare for your child’s tuition costs and to help them manage their student loan debt once they start their post-secondary education.
1. Plan For Your Student Debt
The best means for keeping student loan debt under control is to plan ahead and put money away for school expenses well in advance. Government sponsored Registered Education Savings Plans (RESP) offer grants and incentives for saving for your child’s education. Even small savings can add up over time and any amount saved up will reduce the burden of unexpected expenses when it comes time for your child to head off to school.
2. Leave Loans as a Last Resort
Borrowing money to pay for education should always be a last resort, and there must be a plan in place to repay the debt before the money is borrowed. Student loans are a common means for funding education, but again, borrowing without a plan in place to pay off the debt is a risk best avoided.
3. Repay Your Student Loans
Student loans are granted based upon the presumption that an investment in education will pay off in a better job with more pay upon graduation. Many students have found this promise to be empty and they have ended up saddled with dubious credentials and large student loan debts. As with anything to do with money, planning can go a long way to reducing the risk. All planning must begin with research. Before heading off to school, careful research into future job prospects is a wise option if you want to ensure the likelihood that the investment in education will actually pay off.
4. Debt Must Be Repaid, and With Interest
Students in particular are at high-risk to accumulate debt while away at school. Many banks will offer student lines of credit and credit cards while they are in school. While this may give them a leg-up in establishing good credit for their future, it is also an open door to debt woes. A strict budget will go a long way to keeping them on track and motivating them to stick to it will ensure that the trip off to school is well thought out and less stressful. Teach your children from a young age not to accept the allure of easy credit. When they are in school the ability to earn money to fund activities might sound hard, but trying to pay off borrowed money is even harder on a student income. They don’t want to be dealing with the stress of paying off debt when the stress of their studies is more than enough to deal with.
So while bankruptcy or a consumer proposal can deal with student loan debt, this only happens after an individual has been out of school for seven years. Our best advice is to keep student loan debt under control before it gets that far. We need to teach our younger generations to be pro-active about the debt they take on, and have a plan in place to pay it off.