Student loans (AKA how most people have to pay for college)

A couple of articles recently came out about student loans, the rising cost of tuition, and the amount of debt facing our young adults and nation.  Some of the most startling facts included:

• 12 million students (roughly 60%) use loans to the cover the cost of college annually
• Since 2008, there has been a 27% increase in tuition at four year colleges
• 8.8%- default rate for federal student loans in 2010 (Highest in a decade with over 600,000 former students defaulting)
• $26,600- average amount of student loan debt for 2011 graduates
• And finally-$1,000,000,000,000 (yes...that's 1 trillion dollars) total outstanding student loan debt in the U.S.
• From "Graduating Into Debt" by Edward Graham (Fall 2013 NEA Today)

As a parent of small children and as a high school counselor working daily with students who will need some sort of postsecondary education to enter their desired career field, those numbers are staggering.  Add that to the fact that the per person average to cover our national debt is $54,140.65 as of today (US National Debt Clock) and it can lead to a concern about whether or not college will be an opportunity for my/your/our children. 

What options are available? How can parents and students prepare to minimize their debt and promote financial responsibility?

1. Talk with your kids about finances.  Let them see you balance your checkbook, pay bills, reconcile your budget, save for big purchases, use credit wisely, etc.  And if you need a little help with any of those things, call Consumer Credit of Des Moines or our Student/Family Assistance Program to get started.
2. Start saving and have your kids save as well.  Even its $5 or $10, it all adds up.  If your kids have a job or receive an allowance, have them set 1/3 aside every week/month into their college savings account.  Iowa also has the College Savings 529 plan as an option that may provide some tax breaks (www.collegesavingsiowa.com)
3. Don't get your kid everything they want.  Kids can be really good at nagging or rationalizing why they need (which usually means want) something.  Make them work for it, barter for it, or pay for it themselves.  Or even say no.  This will teach them to prioritize, save, and also learn to delay gratification.
4. Encourage family members to donate to savings accounts rather than buy gifts for birthdays or Christmas.
5. Know what's out there for kids after high school.  Not every student should go to a 4 year college.  Check out other options- there are apprenticeship programs, specific diploma/certificate vocational programs, and 2 year degrees as well. Make sure you, along with your student, sit down and do a cost comparison. 
6. Don't pay for stuff that you can get for free- scholarship searches, career counseling, ACT/testing preparation materials, the FAFSA (Free Application for Federal Student Aid).  Contact your student's counselor to get more information or check out the website at www.carlislehighschoolcounseling.weebly.com
7. Have your student take the Financial Literacy or Adult Living course.  They'll learn how to make a budget, get a loan, get insurance, find an apartment and other real-life skills.
8. Encourage your students to do well in school.  This will help them when it comes time to apply for scholarships.
9. Have students fill out scholarships!  During senior year, students should spend time applying for any and all scholarships they are eligible for.  These could be from the college they are planning to attend, local businesses, or national searches.  Scholarships are free money!
10. Help your student with making decisions around borrowing for college.  A lot of students see that they can get a loan for $5500 and take the whole amount, rather than calculating how much they really need and only borrowing that amount. 
11. Ask questions!  Contact financial aid offices, use your school counselors, go to the Iowa College Access Network.  Again- these things are all free and they are here to help you understand your options!

I'm not trying to say that kids shouldn't go to college or that no one should have to take out loans.  I did, my husband did, my kids most likely will, and most of my co-workers did.  But, do try to be proactive so that students can leave their postsecondary education, land that first job, and not be bogged down by a mountain of debt!