How to Prepare Your Child to Manage Student DebtJul 31, 2018
While many Canadian parents want to help their kids with the cost of university, the reality is that their own debt and other financial factors can get in the way.
An April 2018 study from RBC and Maclean’s found that almost 33 per cent of college-bound students don’t get any money from their parents or guardians to help cover university costs. The reality is, in times of high consumer debt, parents may need to find other ways to help their kids through university.
What can parents do instead of providing financial assistance? Make sure your child has a solid understanding of how to handle their own finances before they begin university or college.
- Teach them budgeting basics. This student budget calculator from RBC can help you figure out how much money your child will need to get through the school year.
- Help them apply for a credit card. A university student can get a credit card once they reach the age of majority. While these cards come with high interest rates, using them can help establish a credit history from a young age. Parents can co-sign for a card, advise on what card will work and help with the process of bill payments.
- Learn how to manage student loans. Parents should be just as aware of the student loan process as their kids. Visit the Manitoba Student Aid site to learn about how to apply for loans, how and when to repay them, and how to get repayment assistance if necessary.
- Know when to ask for help! This is one of the most valuable pieces of advice parents can give. Encourage open and honest communication. Students shouldn’t be afraid to talk about money, discuss challenges and ask for help when necessary. Research resources on money management and debt options together if necessary. The important thing is to create an environment where your child is okay to ask you for help if they need it.
Even if parents are unable to provide financial support, they can pass on valuable money lessons that can help their kids get university-ready. These lessons on debt, budgeting and communication go beyond college too: they’re skills that are valuable for life.
For parents who are unable to financially assist your university-bound child, listen to this BDO Debt Solutions podcast episode for tips on other ways you can help. Our Licensed Insolvency Trustees (LITs) offer advice and tips on knowing when to say no, learning about student loans, encouraging open communication and more.
Do you have tips to share with other parents of university or college-bound kids? Share them on social media using the hashtags #DebtSolutions, #BackToSchool, and #DebtHelp.