Why My Teens Opted for Student Loans

So, there is a looming irony in our household - namely, that while we are on this debt free journey, my teens will be taking new student loans to continue their education. While this decision clearly goes against our family goals, there are reasons why it is the right one for my teens.

I mentioned that both of my teens are college bound and will be living on campus in the Fall. Both have been working this past summer, with the oldest holding down two jobs. My teens were fortunate enough to find summer employment at a place that they can return to during the holidays and even work part time while in school. Even more important though, is that this job offers a 401K plan and I have helped both teens enroll at 10%

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As they continue their college careers, we have agreed that they will take responsibility for one additional item each year. As a freshman, my youngest teen is only responsible for the things she wants to decorate her dorm room, while my sophomore is responsible for all books and classroom supplies. Junior year they will be responsible to cover their own meal plan as well, and by senior year, they will be covering everything but the actual per credit cost of attendance.

There is widespread debate about whether or not student loans can be considered “good debt”. Dave Ramsey followers would warn against them at all costs. But many others still believe that student loans that help obtain a lucrative career are worth the investment. Quite often, student loans mark the absolute difference between a High School and College degree, which we feel is the case for my teens.

Although they will graduate with student loans, we have developed a plan to pay them down while they are still in school, and then to contribute half of their accumulated savings shortly after graduation. We will keep working this plan to ensure they can pay off their loans by the time they are 28. I have made this commitment to help them pay off these loans in lieu of the funds I would have saved, had I been more financially savvy while they were young.

While they both could have considered going to community college, or I could have pressured them into waiting until they had enough scholarships and money saved to pay on their own, I believe all three of us understand the importance of borrowing only wait they need and paying it off as soon as possible

So what about you? Would you be adamant that your college bound student avoid loans, even if you don’t have enough money to pay for their education on your own?