Student loan debt is one of the prevalent issues when it comes to higher education. Despite their best efforts, a great percentage of students still graduate from college with an average debt of $30,000. However, parents can help their kids graduate debt-free with these simple strategies.
Educate Them Financially
In a National Financial Capability Study conducted by FINRA, nearly two-thirds of Americans could not pass even a basic financial test. This shows the state of financial education in America. Instead of waiting for schools to teach your children financial education, parents should take responsibility in teaching their kids how to handle money. Furthermore, you can teach them about loans and debts by offering them a loan along with terms how to pay them.
Adjust Your Finances
Most students can apply for federal aid and as a parent, you can help maximize their federal aid eligibility by adjusting your finances.
How do you do that?
It is a common fact that your tax information is an important factor when deciding how much federal aid your child will get. The more money that goes into your child's name, the less amount they will get for federal aid. Therefore, if you withdraw money from your retirement account early on or sold some property, that will reflect on your tax information and counted as additional income. In order to maximize the eligibility of your child for for federal aid, adjust your finances during the first half of your child's junior high school year.
Use Your 529 Plan
There are different kinds of 529 plan but the best is one that offers tax deductions. You can use those savings and increase your 529 contributions; thus, your child will have more money for their college education. Therefore, it helps to take a look at the terms of each plan when you're comparing your options.
