What parents need to tell teens about student loans

Jul 15, 2013, 1:52 PM | Updated: 1:52 pm

PROVO — It has become something of an annual tradition, torrents of student loan “horror stories” flood the Internet just months after graduation, many written by students who say they never realized their debts would follow them for life.

Among other variables, parental support is a key indicator for post-college success, according to research by BYU professor Larry Nelson.

“It's hard for a young person trying to transition into adulthood without parental support,” he said. “Our research shows that the parent-child relationship is one of the strongest indicators of whether young people will flourish or flounder in the transition to adulthood.”

Discussions about paying for college should begin during high school, Nelson said, when students can take full advantage of classes, extracurricular activities and other resources that could improve their odds of obtaining a scholarship. Research suggests that, high schoolers should avoid working more than 15 hours per week during the school year. Students who take on more work are less able to participate in school activities, and their grades suffer, Nelson said.

“There are settings for teenagers to be in where the outcomes are worth more than a minimum-wage income,” he said.

Typical workplace settings for most teens aren't conducive to developing career-oriented job skills, Nelson explained. If teens so choose, they can take on additional hours over the summer and save that money to defray college costs.

As teens begin to plan more actively for college, parents should help their teens shop around for affordable tuition and for the best financial aid packages, said Chris Greene, a spokesman for the U.S. Department of Education's Office of Federal Aid.

“It's like shopping. You want to comparison shop,” he said.

Colleges are required to provide cost estimates and calculators, but Greene said students should apply to multiple colleges to look for the best financial aid package. He also encouraged filling out the FAFSA online as soon as possible, regardless of whether parents believe they will qualify.

Ultimately, it's never too early to start saving for college — you don't need to know where a student might attend college to open a savings account. The sooner parents start talking to their children about financing college, the better, Greene said.

Savings can certainly help pay for college, but Jim Gilmoure, the associate director of student financial aid and scholarships at the University of Oregon, said it may not be possible for students to work and pay their way through college anymore. He said looking for scholarships and thoroughly researching financial aid options was essential to college success.

Oftentimes, students may qualify for more loan money than they actually need, Gilmoure said. Parents should help their students look at their expenses, and students should only borrow money when it is actually needed.

Parents should also help students identify which schools are affordable, and which are not. While working with his own kids, Gilmoure said, “in some cases, we had to say that there were some schools they were interested in that we really couldn't afford.”

When talking about loans, Nelson said, parents should educate their teens about the loan process, types of lenders, and the risks and benefits associated with borrowing money. Once in college, Gilmoure said students can run into trouble when the schools inundate them with so much information about their student loans that they fail to absorb the reality of how all these loans add up. Their main concern is getting their education, and they may think they can deal with paying off loans sometime down the road.

To make sure students absorb lessons about abstract, far-away consequences like loan repayment and interest, Nelson said parents should look for teaching opportunities that are relevant to their students. For example, a teen's desire to buy a car provides ample opportunity to talk about loans, interest, budgets and needs vs. wants, Nelson said.

When his own daughter began applying for colleges, Nelson said the family conversation focused on making wise economic decisions regarding education while they considered in- and out-of-state options and looked at scholarship possibilities.

“The big thing was those topics arose from situations that were relevant to her,” Nelson said.

If parents look for them, those opportunities will arise during high school, if not earlier.

“Underscore doing as much as possible to avoid taking out too many student loans,” Nelson said. “I can’t underscore that enough, and I think that comes from a well-rounded high school experience.”

EMAIL: epenrod@deseretnews.com

Lifetime Windows & Doors

We want to hear from you.

Have a story idea or tip? Pass it along to the KTAR News team here.

Arizona News

(City of Flagstaff Photo)...
Associated Press

United to stop service to Flagstaff airport for at least 6 months

Officials at Flagstaff Pulliam Airport say United Airlines plans to suspend service to the northern Arizona airport starting Oct. 30 and will review the situation after six months.
7 hours ago
(Photo by Courtney Pedroza/Getty Images)...
KTAR.com

Ballots sent out, early voting begins in Arizona for 2022 primary election

Early voting is underway in Arizona for the 2022 primary election and ballots were sent out to voters in Maricopa County on Wednesday.
7 hours ago
A desert tortoise with radio transmitters installed on his back. (Irfan Khan / Los Angeles Times vi...
Alex Weiner

Arizona wildlife officials seeking forever homes for 200 tortoises

Arizona Game and Fish Department has 200 captive tortoises available for adoption primarily due to illegal breeding.
7 hours ago
(Photo by Soeren Stache/Getty Images)...
SuElen Rivera

Chandler approves construction for water facility supporting drought prevention

The Chandler City Council approved construction last month for a reclaimed water facility supporting drought prevention. 
7 hours ago
(George Oliver Photo)...
SuElen Rivera

Developer buys Biltmore Commerce Center, plans $52M renovation

A Phoenix developer announced on Thursday the purchase of the Biltmore Commerce Center with plans for a $52 million renovation.
7 hours ago
(ADOT Flickr Photo)...
KTAR.com

​​Broadway Curve Project to close I-10 near Phoenix Sky Harbor Airport this weekend

Drivers going to Phoenix Sky Harbor International Airport over the weekend will have to detour around a closure of westbound Interstate 10.
7 hours ago

Sponsored Articles

...
Day & Night Air Conditioning, Heating and Plumbing

Most plumbing problems can be fixed with regular maintenance

Instead of waiting for a problem to happen, experts suggest getting a head start on your plumbing maintenance.
...
CANVAS ANNUITY

Best retirement savings rates hit 4.30%

Maximize your retirement savings with guaranteed fixed rates up to 4.30%. Did you know there is a financial product that can give you great interest rates as you build your retirement savings and provide you with a paycheck for life once you retire? It might sound too good to be true but it is not; this product is called an annuity.
...
Arizona Division of Problem Gambling

Arizona Division of Problem Gambling provides exclusion solution for young sports bettors

Sports betting in Arizona opened a new world to young adults, one where putting down money on games was as easy as sending a text message.
What parents need to tell teens about student loans