10 Ways to Help Your College Student Get Out of Debt

With school starting for many, and it being right around the corner for others I wanted to talk about 10 Ways to Help Your College Student Get Out of Debt. I really am passionate about this subject because I think it is vital to not get yourself so in debt during college that you are a slave to your bills once you graduate.

Borrowing money has become the “norm” for college students. They take out student loans to help pay for tuition, books and living expenses. It can be difficult to not let these loans get out of hand. They need to understand that they can’t live outside of their means, especially while still in school. There are ways that you can help your student get out of debt while they are still in college.

1. A Job. Encourage your student to get a job. The pressures of school can be overwhelming at times, but it is important that they take responsibility for their choices. Help them understand that getting even a part time job will make a huge difference in getting out of debt.

2. Make a Budget. Sit down and make a budget with your child. Encourage them to stick to a personal budget on a daily, weekly and monthly basis.

3. Hide the Credit Cards. Once you have the budget figured out, help them hide their credit cards. They won’t need a credit card if they are sticking to their budget. Make sure they still have the credit card in case of emergencies, but they need to understand the importance of using their budget, not their card.

4. Debt Payoff Plan. Set up a plan for your child to pay off their debt. Tier the payments so they pay off the debt with the highest interest rate first. Make sure you help them make a plan. Don’t do it for them.

5. Payment Plans. Have your child call their creditors and set up a payment plan with them. The creditors will work with them if they are honest and sincere about paying off their debt.

6. Pay More. Help them understand the danger in paying only the minimum payment. Explain that minimum payments don’t help you pay off the debt, they help you stay in debt longer.

7. Lower the Interest Rate. If your child has good credit and hasn’t been late on any payments for over a year, they can actually call the creditor and get a lower interest rate. Have them call and negotiate the rate down to where they won’t be paying as much in interest.

8. Settlements. Some creditors will let them negotiate a settlement. The creditors will actually settle on a smaller amount in exchange for a quicker payment. This will save your student money in the long run because they won’t have to keep paying interest.

9. Financial advisor. Have your student meet with a financial advisor at their college or university. Often times, the advisor can help them apply for federal grants. If the receive a grant, they will be able to free up some of their money and use it to get out of debt.

10. Don’t do it. It is tempting to fix your child’s problems for them. Make sure you help them get out of debt, but don’t do it for them. They need to get out of debt on their own so they don’t expect you to help them late down the road.

There are many things you can do to help your college student get out of debt. Sit down with them and figure out what will work best for their individual circumstances. Being their for advice, not just money, will help them understand the importance of debt free living.

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