Student debt looming over you?

Each Fall, the rite of passage for high school students includes applying for higher education after high school graduation. Preparation is the key.

A key factor and consideration about student aid is properly considering the student’s interests for possible careers. This increases the chances the student will complete their education. One of the factors for high student debt in college completion rates. Those who complete college tend to find jobs to repay their loans while those who do not complete college tend not to.

The Department of Education and Consumer Financial Protection Bureau have teamed up on a financial aid shopping sheet that begins your thought process about accepting student loans.

The process begins with you understanding the differences between the types of loans (federal or private) and what payment terms are available under either.

Financial aid is typically made up of loans. Loans need to be repaid! Sometimes the student may receive a grant … look into those details to see repayment terms for those as well (often grants do not have to be repaid … but be sure to look at the details). Sometimes the student may receive a scholarship (typically do not have repayment terms).

To avoid surprises later, the process begins with understanding the financial aid offer. Comparing the offers will help you decide what is affordable in the long run for the student.

Consumer Financial Protection Bureau website.

The FAFSA website is also a great place to start.

Other tools:

The Armed Services has a great tool for high school students to explore their interests that match their personality. Although sponsored by the military, there is NO requirement to join when they take the Armed Services Vocational Aptitude Battery (ASVAB).

The Bureau of Labor Statistics also has a career exploration site, however the ASVAB is probably more in depth as to matching likely careers to personality.

So … career interest leads to the type of education (University or Technical School) AND financial aid sites lead to how to pay for that education. With type and aid in mind, then the student can search for the school that interests them (remember, to match the school’s personality with your student too … this increases the odds of graduation … school visits are important so the student can see and feel the school’s atmosphere). Of course, saving ahead of time helps reduce the stress of paying for higher education. And retirement savings should be a priority over higher education (you can’t get a loan or aid for retirement; but your child can get a loan or aid for their education).

About Larry Frank, Sr.

Larry R Frank Sr., MBA, CFP®, is an experienced financial advisor and a published author on Retirement Planning Research. Have a financial question? Click Here to Ask Larry

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3 Responses to Student debt looming over you?

  1. Larry Frank, Sr. April 23, 2014 at 8:59 pm #

    A potential trap for the student who takes out a private loan for education (versus a federal loan) with the aid of a co-signer …

    http://www.nytimes.com/2014/04/22/us/student-loans-can-suddenly-come-due-when-co-signers-die-a-report-finds.html?partner=rss&emc=rss&smid=tw-nytimes&_r=0

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