How Student Loans Can Paralyze Your Kid’s Career and Marriage Prospects (and the 3 Steps to Prevent It)
Before feminism hit center stage in the 1960s, marriage and college were closely connected. While men earned their M.B.A., some women went to college to get their M.R.S. College meant an opportunity to snag an educated husband and marry “up” in society).
Fast forward forty years, and (most) women aren’t going to school just to get hitched.
But today, there’s a different problem. College still has a big effect on careers and marriage, and borrowing to pay for it may affect your child, her career and when (or if) she’ll get married.
The Negative Effects of Student Debt on Jobs and Matrimony
It’s a well-known fact that student debt is a big burden when you’re young (and those of us who feel the burden would like to get rid of our loans ASAP). But several studies find that student debt has a bigger impact beyond immediate cash flow constraints and could impact your child’s post-college life in a serious way:
1. Student debt affects graduate school
Does your child want to get a Masters in Public Health or specialize in Psychology? Well if he graduates with student loans, he’s less likely to get an advanced degree. Research shows that students who graduate without debt are almost twice as likely to go on to graduate school as students who graduate with some debt.
2. Student debt affects career choices
Many kids head off to college with ambitions to change the world or pursue a political career. Student loans may change those plans. According to one study, an extra $10,000 in debt corresponds to a 6% decrease in the likelihood that your student will work in the public service sector. That means college grads may choose a job that “pays well” over a “do good” career.
3. Student debt affects marriage
If your child end up tens of thousands of dollars in debt after graduation, then she may also be less likely to get married. Studies show that borrowing an additional $10,000 for colleges decreases the long-term probability of marriage by seven percent or more. Student loans also delay starting a family and getting married, as cash-constrained young couples forgo saving money for a down payment a house or getting marriage. And more recently, many twentysomethings are choosing to live at home (and not with their significant others) in order to save money.
Three Steps to Help Your Kid Avoid the Student Loan Debt Effect
Okay, we get it. Student loans suck.
So how do you make sure your kid has options after graduation?
1. Start saving for college yesterday
Parents, I’m sure you’ve heard this thousands of times – but it’s never too early to start saving for college. If you have a little one, start researching college savings accounts now. Even if your kid is older and almost off to school, it’s not too late. Every dollar saved is one less dollar he has to borrow (and less debt means he’s more likely to go to grad school and marry the woman of his dreams).
2. Pick a high-value college
Begin talking about college options with your kid, and make a list of high-quality, high-value colleges. This does not mean the cheapest college you can find or even a state school, necessarily. Not all state schools will be the cheapest option, and some elite private schools will cover most of your child’s tuition, if your family meets certain income qualifications.
Treat college education like any major purchase: comparison shop, understand why you’re buying that product, and know what you and your child want out of the purchase. You don’t necessarily have to go with the cheapest option, but make sure you’re getting the best bang for the buck.
3. Borrow federal loans first
Federal loans offer several perks that private loans don’t, including:
- Fixed interest rates
- Loan forgiveness
- Deferment (postponement) options, including deferment of loan payments when a student returns to school
- Income-based repayment plans
The Income-Based Repayment Plan offered by the feds is especially important. If your child graduates from college unemployed or making minimum wage at a neighborhood deli, the Income-Based Repayment Plan means she only spends a certain percentage of her earnings, instead of a ridiculous monthly payment.
That few extra hundred dollars a month could mean the difference between moving out of the house and starting a life with the person she loves or not.
Save Your Kid From A Matt Foley Future
Borrowing less for college means more life options for your kid. If you start save for your child’s education now and make smart decisions when it’s time to pay for school, you can save your kid from ending up alone and living in a van down by the river.