By John Drachman
If you and your young one are concerned about the rising cost of student debt, you are not alone.
More than 44 million Americans are grappling with a kind of “mortgage” on their children’s’ future to the tune of more than $1 trillion dollars, according to a 2018 Sallie Mae survey.
That means the average student’s slice of the debt pie is about $37,000.
One of the most eﬀective ways to pay down your own student debt is to accelerate the payments, even if it’s only a little bit. Or use the occasional, well-timed windfall, for a job bonus or a gift, to chisel away at loan principal. Meanwhile, a cornucopia of online tools wants to make it easier for parents, children and financial advisors to stay of the same page when it comes to managing college debt.
- Challenge #1: Getting started Sometimes just automating payments and keeping track can be a challenge. Fortunately there’s an app for that. Check out Sallie Mae’s award-winning, free mobile app that lets you manage and make your Sallie Mae payments right from your phone or smart watch.
- Auto-check for lowering payments The app from FedLoan Student Loan Servicing adds a cool feature: the ability to upload your income verification requirements to apply for reduced, income-driven repayments.
- Pick up the pace Do you and your career-bound eager beaver want to aggressively pay down your college “mortgage?” The Debt Payoff Planner & Tracker makes it easy to customize your pay-off plan with step-by-step planning, pay-off summaries, and colorful charts for visualizing your debt-free future. Your offspring can also use the app to pay down their condo mortgage, car payments and anything else their heart desired.
- Spare change anyone? While some graduates may check the seat cushions for spare change, the digital generation is using another approach. The ChangEd app charges $1 per month to round up your everyday purchases to the nearest dollar so that loose change is automatically credited to a student loan account every time the balance hits $100.
While apps can help, a singular focus on savings strategies or debt reduction won’t be enough to meet the wide variety of family expectations. Over the last 20 years, enormous changes have taken place across the college cost and funding landscape.
Today, many are finding that they need approaches that won’t compromise their retirement savings goals or other objectives on their way to sending the kid off to college. Fortunately, a growing segment of advisors has developed specialized capabilities in crafting wealth management strategies that incorporate college planning into holistic, personalized strategies for clients grappling with other planning challenges.
At the end of the day, there are two very different prices for a college education: the one that prepared, well-informed buyers pay and the one that everyone else pays.
John Drachman is a contributing writer to www.myperfectfinancialadvisor.com, the premier matchmaker between investors and advisors .John is an IABC award-winning writer, who applies his 30 years of financial marketing experience toward empowering the dialog between investors and investment professionals.