Most of us who have experienced college are all too familiar with that intimidating mountain you have to climb upon graduation: repaying your student debt. Seeing our children struggle financially is heart-wrenching, and though we want to see them prosper and be resilient, life today just isn’t the same as it was when we were young. The cost of living, inflation, and education expenses has continued to soar over the years, leaving our new graduates with debts far exceeding their entry-level incomes. Here are nine ways parents can help their kids repay their student loans.
- Offer to match your child’s monthly payment
A large debt like a student loan can seem overwhelming for a new graduate. Times have changed. To help keep them motivated to pay off their debt as quickly as possible, save money on interest, and avoid default, consider offering to match their payments monthly or bi-monthly. Everything helps.
- Assist them with in-school payments
Generally, if a student is enrolled at least half the time, they are only required to repay their student loans after graduation and the grace period concludes. If a parent makes in-school payments, this generosity can help to lower the debt your student would have later on.
- For birthdays and holidays, give them loan repayments as gifts
A lot of parents out there are uncomfortable just giving their child money. They worry the child might become spoiled or feel entitled. If you use birthdays and holidays as reasons for giving your child money to help repay their loan, they may appreciate the gift more and use it wisely.
- Cosign a refinancing loan
First-year undergraduates can only borrow up to $5,500 annually in federal loans. Therefore, some students will need other financing options to pay for the rest of their education. These borrowers can take advantage of private loans. However, some students might not have the necessary credit to qualify. In such cases, parents can cosign a loan, helping their child secure the loan with a reasonable interest rate that can make paying for college more manageable and less stressful.
- Consider a parent PLUS loan
A parent PLUS loan offers money to help you pay for your child’s undergraduate education. Eligible parents include biological and adoptive, and in certain circumstances, stepparents may also qualify.
- Help them with day-to-day expenses
Life today is expensive, and the cost of living is through the roof. Inflation has been steadily increasing, and young people, especially those with entry-level positions, may need help as they find themselves living paycheck to paycheck and realize they simply can’t put aside enough to repay their school loans confidently. Helping them with their day-to-day expenses can allow them to use the extra money to repay their loan faster, saving them money in the long run from accrued interest.
Consider consulting a financial professional to see which method works best for you and your financial goals. Everybody’s situation is different, and understanding how your decisions will impact you and your child’s future can help your family prepare for whatever challenges may arise.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.
This article was prepared by LPL Marketing Solutions
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