Parents, Here's How to Help Your Student Repay Their Loans
Make Payments While Still in School
Typically, student loans do not require repayment until after college graduation. However, both you and your child can still make payments toward the loan before then. Even if you can contribute only $50 a month toward the loan for the four years your child is in school, if you start freshman year, it will still add up to $2,400 of repaid debt by graduation.
Richard Sabo initially wanted his daughter to pay for her own schooling so that she would take it more seriously. Sabo's father had paid for his college, warning him that if he didn't graduate, he would have to join the Marines. "I didn't take it serious since it wasn't my money being spent," said Sabo. "I feel I would have been more disciplined if it was my money." He never graduated and joined the Marines in 1984.
Although Sabo didn't foot the bill for his daughter's college education — she used student loans — he did help her repay them.
"I told her that I would pay the interest on the loans while she was in school so they didn't get bigger," said Sabo, who runs an independent financial planning firm in Gibsonia, Pennsylvania. "After college, I did help her pay off some of the principal since she had done a good job and got an education."
Try to Match Your Child's Payment
If you can, motivate your child to pay more toward their loan by offering to match their payment dollar for dollar. Once loans are in repayment, you might also encourage your child to pay above and beyond the minimum amount due to pay off the loan faster. While not every parent will be able to help in this way, contribute what you can, and your child will feel like they are not facing their student loan debt alone.
Help with the Essentials
If you don't have the money to put towards your child's student loan, you can still ease their financial burdens. Providing your child with groceries, inviting them over for dinner regularly or even allowing them to live with you rent-free while they tackle their loans can be a huge help. Make it clear that you will continue helping as long as your child has or is looking for a job. The goal isn't to give your child a free ride through life, but instead give them the boost they need to be financially independent.
Forgo Gifts and Pay Toward Loans
While your child might have other items on their wish list, a payment toward their student loans for a birthday or holiday may be more helpful. Ask other family members if they are willing to do the same, which can help give your child extra funds to pay off their debt faster.
Help Them Make Career Connections
Landing the right job is difficult for many recent graduates because they often don't have the contacts necessary to find stable careers in their chosen field. They don't know the insider that will get their résumé past the slush pile. Help your child connect with professionals that can help build their early career, while also earning an income that they can pay toward their loans.
As a parent, it is not always your responsibility to help your child repay student loans, but it can be a boon. "I would tell parents if they can, at least pay the interest while their child is in school," said Sabo. That way "the loan balances don't grow until the child can pay on them."