Transition loan responsibilities to your child.
When your son or daughter graduates, withdraws from school, or drops below half-time status, he or she may have a grace period, during which there are no required loan payments.
The grace period gives your child time to find employment, and it gives you time to officially transfer any loan management that you may have taken on.
Step 1. Give your child all of his or her loan paperwork.
Sit down with your son or daughter and discuss the state of the loan. Discuss any payments you have made to date. Make sure your son or daughter knows the names of the lenders/loan servicers and has the correct contact information.
Step 2. Contact the lender/loan servicer.
If your son or daughter is moving out on his or her own, make sure your child gives the lender/loan servicer his or her current mailing address so your child will receive all billing statements and mailed communications regarding the loan.
Step 3. Always be available to answer questions and provide support.
It goes without saying that you do this anyway in your role as parent. Once you turn over loan responsibilities, you can expect your child to have questions about the loan and seek your advice. Encourage your child to deal with debt responsibly and help build good credit.
Find reliable financial resources.
The most important thing you can do when communicating with your child about his or her loan or general finances is to provide ACCURATE information.
- Have your student look up his or her federal student loan information on the U.S. Department of Education's National Student Loan Data System (NSLDS). This online resource will tell your child who all his or her lender/services are for any federal loans. Your child will need his or her PIN (personal identification number) to access this information.
- Make sure your son or daughter knows the Web address of each lender/loan servicer with which he or she has loans. The best place to manage student loans is via the websites of these lenders/loan servicers.
- Encourage your son or daughter to use a website such as mint.com or a budgeting tool such as Quicken to monitor finances, set a budget, and track spending.
- The U.S. Department of Education's website www.studentaid.ed.gov provides additional information regarding payment plans, forgiveness programs, and student loan industry updates.
- If your son or daughter has an unsubsidized federal loan, recommend that he or she make quarterly interest payments while in school to reduce the interest that is added to the principal at the end of the grace period.
- Encourage your son or daughter to make principal payments during the grace period to reduce his or her student loan debt and possibly reduce the amount of time he or she will be in repayment.