My kid rode home from the hospital in a car seat – an approved, properly anchored car seat. The electrical outlets in our home were carefully covered with plastic safety plugs. I read him books and checked his homework and made sure he held my hand when crossing a street. I tried to limit his soda and french-fries and I encouraged him to drink his milk and eat his vegetables.
I bet you did the same with your kids.
As parents, we do everything we can to ensure the safety, success and happiness of our children. We want to give them every possible advantage.
Yet most of us stand by and do nothing when the financial aid officer offers them a student loan. It’s not that the parents or the students are stupid, they are just sucked in. We’ve been taught that it is normal to go to college on a student loan. If NYU is your child’s dream, it seems that at the time it’s worth anything to make that dream come true.
It is not. The four year dream can become the 10, 15 or 30 year nightmare.
Do you remember you first debt?
Let’s think about this a minute. Cortney Munna, the Religion and Women’s Studies graduate, will be making payments of over $700 for 15 years. How many recent college graduates do you know that have $700 a month available in their budget?
She will have to make these payments no matter what. Unlike credit card debt, student loans normally are not discharged with bankruptcy. And unlike a car or a house there is no asset to repossess. It is nearly impossible to have a student loan forgiven. It does not matter if Cortney should face a spell of unemployment or if her spouse or child should become ill, the payments are due and if she doesn’t make them her loan will be in default. Defaulted loans continue to accrue interest and collection charges.
Defaulting on a student loan can have very serious consequences. Garnishment of wages is one probable result. Additionally, the government can intercept your tax refund and/or take a portion of your Social Security disability or retirement benefit. Another crippling consequence of a defaulted federal loan may be the inability to renew a professional license. View the excellent graphic The Student Loan Scheme.
Even if Cortney is never late on a payment, she has started her life as an adult in a huge hole with tremendous risk.
So how could this have turned out different?
We have to love our children enough to say NO. NO you cannot cross the street alone when your 5, NO you cannot drink and drive and NO you absolutely will not go $97,000 in debt for a degree in Religion and Women’s Studies.
Would she have listened? If it were life or death, you could make your adult child listen.
This is life or no life; find a way to get through. Get her to talk to 5 recent grads in her field; look up starting salaries; make a budget of what life will be like after graduation. Work together and explore ways of getting the same results without the debt.