College Costs, Snowflakes, Engineer Girl, Constitutional Convention, and More
From the Editor
As I write this, it’s the coldest day we’ve had all winter here in Virginia and I’m determined not to leave the house unless I’m forced to. I hope it’s warmer where you are! This month we have some fantastic resources, including a timely article to coincide with the upcoming due dates for most financial aid applications. In addition to the article, we have a free workbook for you to use with your teen. It helps your child evaluate college options and the cost of each by working through actual costs, projected budgets, opportunity costs, and more (the link is at the end of the article on the website). I hope it’s useful to you, and I’d love to hear how you are using it with your teen.
Enjoy the newsletter!
Mary Ann Kelley
Recent Blog Posts
Talking To Your Teen About College Debt
I’m a fan of natural consequences, but sometimes the lessons are too big – with consequences that last a lifetime – for the maturity level of the child. One such example is when a child wants to take on significant debt in the form of college loans. Most 17 year old high school students do not have the life experience to be able to understand the impact that taking on tens of thousands of dollars in debt will have on their lives.
While I encourage young adults to have freedom in making their own decisions, wise and carefully presented parental input is imperative in this issue. Most people would never consider advising a 17-18 year old to purchase a $80K house with payments deferred for 4 years (and a home loan has collateral — if you go into default, they foreclose and the debt is gone), yet are comfortable with student loans that have even more of a financial impact.
Few young adults who have never supported themselves financially can truly understand what they are getting into with student loans. A friend of mine opted for her top choice of colleges, a small private school, and ended up with over $50K worth of student loans. She got a good job with her degree, but even so, the debt informed every life choice until she was almost forty years old.
The opportunity cost of student debt is high — the trips that could have been taken, the option to stay home when kids are born, the kind of house that is affordable after the loan payments, and a myriad of other experiences lost when money is still paying for loans 20 years after graduation. Even in such circumstances as becoming disabled to the point that a person is unable to work, student loans may not be discharged without legal maneuvering — bankruptcy does not discharge student loans. High school seniors don’t have the life experience to be able to understand the legal commitment that they are making.
Opportunity Cost. (n.). BusinessDictionary.com. Retrieved February 14, 2015, from http://www.businessdictionary.com/definition/opportunity-cost.html
Thanks to Karen B. for her assistance with this topic.