I get it. Parents want nothing more than to send their kids off to college without having to worry about the financial side of school at all. You don't want your kids to feel the stress of the huge debt burden that higher education has become over the years. You want your kids to be able to focus on the important task at hand, and have a great time while they are away. You want to protect them!
Stop it. You are screwing your kids over.
When I was a high school teacher, it was always a lot of fun to see my senior students' excitement about college. Higher education is their first taste of freedom, and they can't wait to get started. After paying off my student loan debt, I made it a point to take some time and quiz the kids on how they were paying for college. Here is a sample of those conversations:
“Are you taking out student loans?”
“Uh..yeah, I think so.”
“Any idea how much?”
“No, not really. My parents probably know though.”
“Are they public or private loans?”
“I'm not sure…”
“Do you know the interest rate at least??”
Now, this would probably be fine if it were just one student. THIS WAS EVERY SINGLE ONE. EVERY. SINGLE. KID. I'm sure that there are parents out there that do a good job of preparing their kids financially.
Unfortunately, most recent college grads that I've talked to have the same answers to the above questions, which means that we are doing a crappy job on a societal level. We have to start teaching kids a few things before they to college so they aren't financially screwed afterwards.
Read also: Are Parents Really Saving for College?
1. Tell them how much college will really cost them.
Stop trying to protect your kids. After talking to a lot of parents about their kids and college, it was pretty common to hear that they wanted their kids to focus on the task at hand…but not the cost.
I can't even imagine how hard that conversation is, but it's so important that your kids understand how much college is going to cost them (if they will be paying for some or all of it). Sit down with your kids and break the bad news BEFORE they leave for college.
2. Make them afraid of their loans.
Student loans are a difficult type of debt to deal with. They don't go away with bankruptcy, and they can follow you all the way to the grave. Instead of shielding them from this, tell them about it and don't sugar coat. They probably won't fail nearly as many classes their freshman year or take time “trying to find their path” if they feel the weight of inescapable debt on their shoulders.
3. Convince your kids to be cheap.
It's easy to trick yourself into thinking that they need the upgraded meal plan or the nicest dorms that the college has to offer. Forget that noise. They need the bare minimum. Period. If they complain about it, oh well. They will have nice stuff and live well after college because you helped limit their debt.
By the way, they aren't going to waste away from lack of food. Trust me. It's called the “freshman 15” for a reason. That extra fat is coming whether they have the nice meal plan or not.
4. Make sure they know how interest works.
You don't really have to make this complicated, but I can personally guarantee that most kids in high school don't have a firm understanding of what interest is, or how it can wreak havoc on their student loan balance by the time they get a job after college.
This would also be a good time to school them about how credit cards work, because they are going to be subjected to that debt risk as well. You won't be able to filter the offers out of their mail when they are finished with school.
5. Bug them about making payments during the 6 month grace period.
This may be the most powerful and easy thing that you can do for your kids before they leave for college. They will think the 6 month grace period on their loans is awesome after they graduate. The grace period makes them feel relieved that they can wait on payments. NO.
Interest accumulates on their loans during this time. Even interest only payments will keep them from more financial hardship later on. Tell them to get a part time job instead of laying around on your couch waiting for interviews.
If you want to protect your kids, stop being afraid of stressing them out. They need that stress, as well as a healthy fear of student loans. They will thank you for it later. College is expensive, and not many people legitimately expect parents to foot the ridiculous bill alone anymore. However, it's YOUR responsibility to educate your kids about money, because the schools aren't doing it for you. I promise.