July 18, 2011
Give Your Grad a Hand: 5 ways to help your child post-graduation
The first years after graduation can be stressful on students, but the stress cast on parents is often overlooked. Parents are faced with the ever-growing problem of how to help their kids land on their feet, and effectively start their own lives. While many are tempted to simply pay the student’s way, this is not always the best option for either parents or students. Parents need to start thinking about retirement, and may not be able to afford those extra years of financial support, and students need to learn financial independence. The problem is, what can parents do? Here are some ideas…
1. Teach Financial Literacy
It’s amazing how many students graduate without any idea what a 401K is or how to use a credit card correctly. These are some basic, teachable (and free) steps that can really provide a foundation for recent grads.
- Using basic accounts – Most students have checking/savings accounts well before college, but should still be aware of the basics. Are there minimum balances? What happens if you overdraft? Little tips like these can pay off big in the long run, and prevent avoidable fees while money is tight.
- One thing my parents taught me when I got my first credit card was don’t buy anything that you can’t afford right now. This has been a huge help, and while I may not get everything I want right away, I have never had an outstanding balance on my card. People may think, “well, what’s the point of having one, then?” To this, I would answer, beginners should be exceptionally careful, using the card only for what’s affordable (except, of course, for an emergency). This will help set a good foundation for lifetime credit use and help grads to avoid even more debt.
- How to save – Students hear tons of financial terms thrown about, (ROTH IRAs, 401Ks, Savings Bonds, etc.) but in most cases, have no idea what any of these things are. Sitting down with your grad to talk about different savings/investing options can be a huge benefit in the long term.
2. Stop the Pressure
With the job market at a low point (though better than last year) finding a job is incredibly stressful for many students. It’s important to keep them motivated during their application process, but do not pressure them or force them to take a job they don’t want. This, of course, is easier said than done, with student loan payments looming on the horizon. To help motivate them, think about setting goals or time limits. Knowing that they have only a certain amount of time to find a job can really help speed the process along.
On a side note: Today, more recent grads than ever are living at home after graduation. If this happens, remember that the house rules in high school may no longer apply. Your child is more adult than kid, and many fights can be avoided by bending some of the old rules, and realizing that your grad may be frustrated with answering to parents again. While this may not help with the finances, it will make this stressful time easier on everyone!
3. Keep Them Healthy
Since the Obama Administration’s recent law, grads are able to remain on parents’ health insurance until the age of 26. Saving students from the high cost of health insurance (or accidents sans-insurance!) can help while they begin to get their life in order. If they need insurance, consider: Graduate Student Insurance Plans.
4. Give Them Credit
College graduates are faced with a lot of firsts – first car, first apartment, first student loan payments, and having a solid credit history can help their future. After teaching basic credit card usage, parents can help students and grads attain their first card, which can now happen in 2 ways:
- Co-sign for a card – This provides independence, but with security. Just make sure that if you do co-sign, your child remains on top of payments, and be willing to help out a little should payments falter.
- Obtain a secured credit card – These require an initial deposit, and the amount of the deposit becomes the credit limit. These are great because you cannot spend more than you have, and teaches smart charging! A downside is that it’s more expensive up front, but you may save in the long-term.
5. Teach Them to Cook
Yes, really. Buying takeout every night, besides being unhealthy, can also really impact your child’s wallet. By teaching your grad to cook, they could save a lot of money on expensive take-out once they’re on their own!
November 24, 2009
Signing off
Well, after 4.5 years I’m leaving the Student Loan Network to pursue other career opportunities. Dave and Kristin and possibly a few others will continue to post and provide you with the best info possible on how to survive the student loan process.
I wish all of you the best of luck in your endeavors. It’s been a pleasure gathering and presenting information to you for the last 4 years.
Monique
June 8, 2009
Why go to college? Less Unemployment!
I hear a lot of horror stories from people who can’t pay back their loans, but for most people college is a really good investment. Lest you still not be sure, take a look at ehse figures from the Wall Street Journal:
“The unemployment rate for workers over 25 years old who haven’t gone beyond high school rose to 10% in May, nearly doubling from 5.2% a year earlier, the government said Friday. Among workers who haven’t completed high school, the unemployment rate rose to 15.5%, compared with 8.4% last year.
By contrast, the jobless rate among those with four-year college degrees was 4.8%, up considerably from 2.3% a year ago, but well below the rate for people with less education.”
May 28, 2009
back in action
Hi all,
Sorry for disappearing so much this month. A bad bought of bronchitis led to a cracked rib, so I’ve had a lot of doctor-enforced downtime recently.
But I’m back in action, ready to bring you the student loan info and news you want to know. Stay tuned for more stories, news items and artilces to help you wend your way through the minefield that is financial aid.
April 28, 2009
Protecting students from credit…and themselves
According to APP.com,Congress is finally attempting to stop predatory lending practices towards the 18-22 year old target group, as they’re the most likely to get in waaaaaaay over their heads.
I definitely disagree with the author’s comment about requiring financial literacy classes being a bad idea. I think they’re a great idea. Most 18-year-olds can’t balance a checkbook and many see credit cards as “free” money.
Bring on the financial literacy classes!
Click here to read the whole article, or read the excerpt below.
“According to a survey by student lender Sallie Mae, undergraduates have an eye-popping average of $3,173 in credit card debt, and 92 percent of college students use the high-interest credit cards to buy textbooks and to pay for other education expenses.
In response, bills are working their way through Congress designed to save these young borrowers from predatory lenders — and from themselves. Some of the provisions in the proposed legislation are overkill, such as requiring those under 21 to complete a financial literacy course. But other requirements could provide important benefits for young people and adults alike.”
March 10, 2009
New Sec. of Education to Schools: Start spending; keep receipts!
According to the New York Times, Arne Duncan, the new Secretary of Education is jumping in with both feet:
“Arne Duncan, the secretary of education, sent a message to the nation’s school officials last week: Heads up! We’ll be sending you billions of dollars by month’s end. Spend the money quickly but wisely. And keep receipts; we’ll be asking.
The message, which went out Friday in documents e-mailed to governors, state education commissioners and thousands of school superintendents, provided the first broad guidelines for how the Education Department intends to channel $100 billion to the nation’s 14,000 school districts over the next few months. The expenditure is part of the Obama administration’s economic stimulus package.”
Looks like our schools will have a small repreive in the near future, but they better spend it well or they will be held accountable!
February 11, 2009
MTV aims for financial literacy amongst college kids
This is something I never thought I’d write about, but I am so happy to see this – MTV is trying to get young folks to understand financial literacy, and perhaps more importantly, to understand why financial literacy is so important.
To do so, they’ve started a new web site, www.InDebtEd.com.
Here, college kids and young adults can learn about personal debt, the dangers of the worry-about-it-later credit card habit, and even learn about how badly our government is indebt.
Did you know
- you shoulder $184,000 of government debt? And so does every other American.
- 71% of last year’s federal budget went to a few key necessities such as defense, medicare, Medicaid and social security.
- “Spending on all other programs—including education, transportation, science and research, law enforcement, and programs that protect our environment and help the poor—represented only 29%.”
- college tuition is currently DOUBLE what it was in 1980
I feel it is vital that our young people learn financial literacy. I’m 29 and even growing up the daughter of 2 finance majors, I didn’t feel prepared when I started living on my own. Kids just aren’t taught fiscal responsibility.
So kudos to MTV for taking action!
January 20, 2009
Congratulations America
Today our 44th President took office. There will definitely be changes ahead – President Obama has already made clear that he wants to change much about our education system in general and higher education specifically.
It will be a very interesting next four years watching the changes. As always, here’s hoping that all changes will benefit students, the ones who need it most.
December 31, 2008
Happy New Year!
It’s New Year’s Eve here, and another blizzard is descending on Boston. To all my readers – please drive safe and if you choose to imbibe, drink responsibly. It’s been a heck of a year here at the Student Loan Network. Thanks to all my colleagues, past and present, and to you my readers for braving the dangerous seas with me.
And so, in the immortal words of the Scotsman Robert Burns:
Should auld acquaintance be forgot,
And never brought to mind ?
Should auld acquaintance be forgot,
And days o’ lang syne ?
- For auld lang syne, my dear,
- For auld lang syne,
- We’ll take a cup o’ kindness yet,
- For auld lang syne.
December 29, 2008
New IRS Rule for 529 Plan for 2009 Only
Got a 529 plan? Good news! You can change your investments twice a year now. According to NCHelp.org:
” The Internal Revenue Service (IRS) has issued a notice establishing a special rule under which a tuition program can permit investments in a Section 529 account to be changed twice a year in 2009, more frequently than the current rules stipulate. This will allow families to adjust their asset allocations in response to turmoil in the stock market. Under the notice, Section 529 programs and their participants may rely on the rule pending the issuance of final regulations under section 529. The Treasury Department and the IRS are also inviting comments on the special rule and any other comments relating to section 529. This special rule will be instituted during 2009 only and is not a permanent change. “
Student Loan Info for Parents 