Having student debt can be a great motivator. For example, individuals may let that debt inspire them to learn about personal finances and kick their finances into shape. Parents with student debt, on the other hand, may be inspired to save enough money so that their children can graduate college debt free. American Financial Benefits Center (AFBC), a document preparation company that helps its clients with application paperwork to recertify enrollment in income-driven repayment plans, remind parents that if they need help with their loans, they may be able to see reduced payments through an IDR.
Many student loan borrowers may see their debt as an obstacle. While it causes many to delay buying a house or starting a family, others have described how they passed on career opportunities because of their debt.
"Millions of borrowers have discovered what effect student loans can have on life," said Sara Molina, Manager at AFBC. "Parents who expect that their kids will go to college someday may want to prevent the financial stress and obstacles they experienced by doing what they can to prevent their kids from taking out debt."
A college degree can potentially catalyze social mobility for low- to middle-income students, but some experts worry that student debt can delay or prevent that mobility. In fact, a recent report showed the extent to which student loans can cause wealth loss over time. It's becoming clear that a college degree has a more positive impact when it comes to less or no debt. However, experts still agree that the degree is worth the debt if students have no other option for funding.
Parents hoping to secure a debt-free future for their children can do a few things to save up a college fund. First, they can set up a 529 plan for each child. A 529 plan is a tax-advantaged plan similar to a retirement plan. Additionally, they can start collecting grants and Scholarships early — sometimes as early as when their child is in elementary school. They can also use credit card rewards to gain cash back that goes directly into a college fund.
Parents who have their student loans may be able to make those loans work in their favor by applying for an income-driven repayment plan (IDR). Such plans calculate payments relative to income and family size and can potentially reduce monthly payments. Any funds freed by such a reduction may be put toward a college fund or other financial goals.
"It's completely understandable that parents would want to spare their children from the negative effects of student debt while still allowing them the opportunity to earn a college degree," said Molina. "At AFBC, we support our clients' financial goals by helping them submit applications to stay enrolled in IDRs with potentially low payments. We hope they feel that they have the freedom to pursue their financial goals, especially if they wish to send their kids to college debt free."
About American Financial Benefits Center
American Financial Benefits Center is a document preparation company that helps clients apply for federal student loan repayment plans that fit their personal financial and student loan situation. Through its strict customer service guidelines, the company strives for the highest levels of honesty and integrity.
AFBC is a member of the Association for Student Loan Relief (AFSLR), and each representative on the phone has received the Certified Student Loan Professional certification through the International Association of Professional Debt Arbitrators (IAPDA).