So why a student loan for my daughter?

student-loansIn a previous post, I talked about my daughter choosing to take out a student loan to finance her college education.

Let me start from what should be the truth for everyone. Student loans are a bad idea. A really bad idea. For something above 90% of students, I would strongly encourage finding another way to fund college.

However, for a select few, there may be a reason to use them. Some of those reasons include:

  1. You are taking out the minimum amount possible. Just because they will give you more than you need, does not mean that you should take it.
  2. You are majoring in something that, in theory, will pay you a reasonable salary. Yes, they will give you student loans if you are majoring in teacher education or social work, but think carefully how much you will earn from those majors.It’s not about the job; it’s about the fact that you will owe more in loans than the job can support.
  3. There exists the possibility that either you or your parents can (and wish to) pay them off early). One of the reasons that I am not a fan of student loans for undergraduates is because I am somewhat less strict when it comes to graduate school.

My best advice for you if you absolutely must take out student loans and you don’t fall into those areas above, consider the following:

  • If you think you will need student loans, consider attending a community college first. That will cut your student loans in half.
  • Live off-campus and work to pay for your meals and housing. Too often, the student loans end up covering the cost of a dorm room.

So how did my daughter fare with these rules? As luck would have it, she is likely to meet all three of my conditions at the top of this post.

Importantly, though, there was much discussion about what this would look like and that no promises were being made on the part of her parents.

While we are most definitely paying a significant amount of money, we will be taking on no long term debt. We will also be helping her in any way we can to avoid or lessen doing this to herself.

And that is the difference: There never is a plan here that she will be paying students loans for the next 10-20 years. If at all possible, we lessen the likelihood by having a plan.

Importantly, a plan is not massive debt.