Do you counsel your teenage kids about school loans?

[essguy_]

The reality is, IF you are a parent (and I’m guessing a few commenting are not) you will have had the debt conversation with your kids well before University. Eg: My eldest has always worked since she was old enough - that’s just how she is (various jobs - part time at a grocer, teaching swimming at the Y, at a big box store, etc). So she’s always had an active bank account, spending money, etc. Banks are VERY aggressive with products and as soon as my daughter turned 16, she was heavily sold on adding a credit card. It was to the point of being irresponsible on the bank’s part. So i had to sit my daughter down and explain how banks make money on credit cards and the danger of debt. This is after many conversations about saving.

The reality of the summer job is that the full time, 18 week job (in the City) are not available for every student. Again, using my kids - my eldest is lucky because she worked at a big box store in high school she now has a regular summer job where they try to give her 40 hours (max) a week. None of her friends are as lucky and neither is her younger sister (who will be teaching swimming at a day camp for well less than minimum wage). Further, IF you are a parent, then you would know that your kids have a social life and interests outside if school. So either your kids save 100% of what they earn, and you end up still giving them money to have a social life. In my case, i give my kids minimum savings goals when they get a job and cut off their allowance. So they had to budget spending, saving etc. The deal is, whatever they manage to save above the minimum, I match.

Anyway, I dont believe in living at home during University. Half of University is the experience of being on your own and the freedom to make choices (good and bad). So I strongly believe that the best thing for a parent is to start the RESP when your first is born and max it out. Invest it wisely and that can be the backstop for your kids. THAT is the best lesson. It allows your kids the choice of where to go, and demonstrates the wisdom of savings/investment. Oh, and the bonus for parents (and payoff) is that it gives you the chance to be an empty nester vs having your kid stay at home.

 

[waterloodude]

I've got one kid in University and my youngest going in Sept. The days of being able to earn enough during the summer to pay for even Canadian tuition, rent/residence, books are long gone. Even tuition is tough to earn during a summer. Think about it. Even at minimum wage, you'd have to be working fulltime for the entire break (let's say 18 weeks) and after tax you would still be short for tuition. When I went to University - I never paid more than $1500/year for tuition and that included my MBA (graduated mid 80's just before the Exec MBA took off). Rent was never more than $300 - 350/month. So it was easy to pay your own way just working in the summer. Not anymore. My ex-wife and I maxed out the RESP and it's done well so that's the backstop for my kids (who are both working full-time during the summer - but will realistically only earn enough to make a contribution to tuition/residence).

A university/college with a co-op option is the way to go. You can make more than a run of the mill summer job. Plus alternating work/study terms help cover ongoing costs better until you graduate. Even better than any degree at the end of it you graduate with real work experience in your field as well as a network to tap into for potential full time employment.

 

[Ameliu]

just my personal experience, but I've always worked ever since I was 13/14 doing part time jobs afterschool and even took co-op and part time jobs in post secondary. Still so hard to stay out of debt, especially if you want to live in Toronto.

Half of this is about financial education, I think there should be mandatory financial courses in high school grade 10, 11 and 12. The other half is about how to make sure you take a proper education that prepares you for the job market. I don't have as many indemand skills as I thought so I'm in the situation I'm in because of that.

Just my 2 cents

 

[rhuarc29]

just my personal experience, but I've always worked ever since I was 13/14 doing part time jobs afterschool and even took co-op and part time jobs in post secondary. Still so hard to stay out of debt, especially if you want to live in Toronto.

I was the same. I had $12,000 squirreled away for my education when I entered university, and still left with $48,000 in debt, despite working 4 months each year and every weekend for the other 8 months. Part of that was studying in the city, but working in a rural area. While that paid off after I graduated, the lower rural wages hurt me considering I had big city expenses. Not to mention the transportation cost.

 

[richaceg]

I did this with my kids, when they got into their teens I told them to plan for after high school, they did and used the funds that was set aside for them. Always educate your children about money at an early age because no one else will. My dad taught me this and it was the best lesson I ever learned.

VBB

pretty much. I grew up fighting tooth and nail for every penny I got. It's not even what my parents taught but simply how I just saw life...if you want something better...work. And I always remind my kids...you simply can't have everything in life without working for it. My son did the paper route since he was 11 (of course me and the wife had to help him doing every house). He owns his Toys (PS4, cellphone, he uses his own money when he goes out with friends) I give him school allowance. He buys stuff for his little brothers. I saved a lot because of it so I'm planning to buy him a car soon and he knows he'll be paying his own insurance for it. as long as you and your kids are on the same page when it comes to your home financials...you will do just fine.

 

[richaceg]

That sucks. Unless you bail her out, or she miraculously gets a great job, she's going to be hurting for decades.... probably forever. If her situation is that bad, don't be surprised if she comes knocking to come home and live in your basement..... I've seen it happen to people. Two 35 year olds with mediocre jobs (but combined income that isn't too bad), but they had a kid, didn't have savings, and had to move home to their parents place. They are now "saving" to buy a house..... Not a starter condo or a modest home in the burbs or Kitchener where it's cheap.... but supposedly saving money to buy a home in the GTA. Good luck with that. Only way they'll get a home worth $800,000+ is if the parents die and they get the house.

The ego these people have. Half shitty jobs that don't pay great, zero savings, living at home, and somehow wants to leapfrog to a decent house like the rest of us have in the family tree.

Here's some advice. You're broke, wouldn't even be able to afford a mortgage that high, probably can't even save up a 10% down payment for 20 years, and what about doing what the rest of us did in recent decades like buy a modest condo to start. Only some people in the family tree 40 years ago were able to buy a house right away (when it cost maybe $100,000).

I swear. I don't think they even have an intention to buy their own home. Just wait it out for 20 years and hope the parents drop dead and leave them the house. I guess that's one way to score a home! lol

As I've stated (more like lectured!) in a few threads about being sound financially (budgeting and ensuring you get a decent job), I don't care what anyone says about money, being Scrooge, or being a greedy fuck 1%'er. Just because a person out there is doing well doesn't mean they are a ruthless Scrooge or a lucky ass who inherited millions. It can just mean you did well and didn't blow your dough.

Money solves lots of issues. Not only does it make things easier, but it's an accomplishment because you can support yourself and support a family without begging for dollars. So that in itself is a checkmark in life in my books..... being self-sufficient.

Lol...I know a few of that too...and I just laugh my ass off when I see on social media some of these people do...when in reality...i doubt they will even own anything...Me and my partner had agreed that as soon as we got a house lifestyle's got to change. She obliged...and she's happy.

 

[fall]

Actually, despite my calculation of how students can earn money for their Canadian tuition over the summer working minimum wage, and despite many stories of how old TERB members worked when they were kids, I think, it is a waste of time for students to work during school on non-career related jobs. Today, to be competitive on the "white collar" market, students (both high-school and University) should study a lot, well beyond the standard program, and look for any career-related job opportunities, including unpaid volunteering. Working for $15/hour is just a waste of time (assuming, of cause, students really want to study and not just socialise and just barely pass the classes - unless their GPA is at least 3.5/4, they are not doing good). And given how little education in Canada cost ($10,000 tuition + books, $5000 room at dorm, $4000 meal plan or less than that for groceries), parents should save enough to get their kids through University. Take a HELOC or do not contribute to retirement savings (unless matched by employer) if needed. If parents really want to separate their own finances from their kids', give the kids an interest-free loan. But know, your kids will treat you the same way as you treat them, so, cover their education, make sure they study and not party, and when you'll get old, they will take care of you.

 

[trucker269]

my daughters college course was 20 months straight, 5 semesters. NO summer vacation, she paid her own tuition with the $ she made working part time while going to high school. lived here at my home while she attended college as its only a 15 mile drive. graduated with 0 student debt....altho Mom and the bank of Dad did help keep her car on the road while she went to college

 

[frankcastle]

There are definitely ways to cut costs.

But for most of us older guys schooling and rent was stupidly cheap. 2k for tuition, 350 for rent. Working 4 months at modest paying jobs could pay for the whole year. I was making 15k and had money left over to hobby and do other things.

When it was time to pay for a home i was paying 1/3 to 1/4 of what a kid would pay today.

The costs have increased faster than the income.

 

[frankcastle]

Actually, despite my calculation of how students can earn money for their Canadian tuition over the summer working minimum wage, and despite many stories of how old TERB members worked when they were kids, I think, it is a waste of time for students to work during school on non-career related jobs. Today, to be competitive on the "white collar" market, students (both high-school and University) should study a lot, well beyond the standard program, and look for any career-related job opportunities, including unpaid volunteering. Working for $15/hour is just a waste of time (assuming, of cause, students really want to study and not just socialise and just barely pass the classes - unless their GPA is at least 3.5/4, they are not doing good). And given how little education in Canada cost ($10,000 tuition + books, $5000 room at dorm, $4000 meal plan or less than that for groceries), parents should save enough to get their kids through University. Take a HELOC or do not contribute to retirement savings (unless matched by employer) if needed. If parents really want to separate their own finances from their kids', give the kids an interest-free loan. But know, your kids will treat you the same way as you treat them, so, cover their education, make sure they study and not party, and when you'll get old, they will take care of you.

This assumes the parent has an extra 10 to 20k to spare.

 

[curr3n_c1000]

Tried to talk my niece out of going to school. She won't listen so she will have to suffer.

She put herself in a bad position in life. Now she is trying to make up for lost time and bad mistakes. Even if she accomplishes her goal, it still wouldn't be worth it.

 

[basketcase]

There's a reason why RESPs can come in handy.

Assuming your kid goes to an approved school. Otherwise you're SOL.

 

[basketcase]

...

I think a problem is that the "pathway to success" is stereotyped as get a university degree....

+1 on the problem. I have absolutely zero problem with people wanting to do a degree in theoretical basket-weaving if that's where their interests lie but they need to realize that it means nothing for future employability.

But I see no way society's view will change.

 

[james t kirk]

Go to university in your town.

I have told my kids they live in Toronto. There is U of T, York, Ryerson. They are all excellent schools and between them offer every course under the sun.

One kid has said she wants to go to U of T, the other though (younger) whines about going out of town "to get the full university experience" like her little friends. I tell her she needs to reconsider unless she has her own money to pay for room and board. She just gets upset.

 

[james t kirk]

Actually, despite my calculation of how students can earn money for their Canadian tuition over the summer working minimum wage, and despite many stories of how old TERB members worked when they were kids, I think, it is a waste of time for students to work during school on non-career related jobs. Today, to be competitive on the "white collar" market, students (both high-school and University) should study a lot, well beyond the standard program, and look for any career-related job opportunities, including unpaid volunteering. Working for $15/hour is just a waste of time (assuming, of cause, students really want to study and not just socialise and just barely pass the classes - unless their GPA is at least 3.5/4, they are not doing good). And given how little education in Canada cost ($10,000 tuition + books, $5000 room at dorm, $4000 meal plan or less than that for groceries), parents should save enough to get their kids through University. Take a HELOC or do not contribute to retirement savings (unless matched by employer) if needed. If parents really want to separate their own finances from their kids', give the kids an interest-free loan. But know, your kids will treat you the same way as you treat them, so, cover their education, make sure they study and not party, and when you'll get old, they will take care of you.

That's funny.

I hire people for my company.

I will NEVER hire any new graduate who has never worked when they are a student IN THEIR FIELD. I want to see career related experience as a university student. It shows a work ethic and it shows initiative.

In fact I won't even hire a kid who didn't have a job while he or she was in High School after school and weekends. "You worked at McDonalds 20 hours a week while you were in High school?"

"Perfect, no lazy person ever worked at McDonalds, you're hired"

As opposed to.....

"I didn't work when I was in High school because my parents wanted me to concentrate on school and I travelled in the summer to live in Split in Croatia to live with family there when I was in university every summer."

I'm old school like that. I'm looking at work ethic and initiative far far more than marks.

Worst thing in the world for me is to hire a lazy person with an entitled mentality. I made that mistake in the past and I won't make it again.

 

[Sharemyinkwell]

Go to university in your town.

I have told my kids they live in Toronto. There is U of T, York, Ryerson. They are all excellent schools and between them offer every course under the sun.

One kid has said she wants to go to U of T, the other though (younger) whines about going out of town "to get the full university experience" like her little friends. I tell her she needs to reconsider unless she has her own money to pay for room and board. She just gets upset.

I agree with you James T. As I gave my kids the same condition. I told them both that I would pay for their university or college education on the condition the they attend a local university/college. If they would have chosen an out of town school.... I pay for school they pay rent.... Utilities and food ...... Go to school at home ..... Free room and board.

Btw: this is my first post ..... Long time hobbyist ..... First time member here.... So far I really like what I see and I look forward to connecting with many of you.

 

[K Douglas]

Well, 40 hours a week for 18 weeks during the summer break at $15/hour minimum wage makes $10,800 (no tax on this amount and even fro higher income there is no federal tax since tuition and room and board is tax deductible), which is sufficient to cover the entire $9,000/year tuition and books. So, if students lives at home and go to a local university and parents continue to feed him (as they did in high school), I cannot see why any debt is needed at all. If he/she had decent grades in high school, usually $1000 or $2000 per year fellowship is given, plus if he/she is smart enough, he/she can find a grader's job (that pays well above minimum wage) and earn extra money for ice cream and 3-week free time in the summer. Almost all decent-sized cities in Canada have decent Universities, so, the only money problems exists for people leaving in rural areas. However, even in this case almost anywhere (except Toronto) a room can be rented for $5000/month, which makes it $6,000/year (or even less if sublet it in the summer and it can be furtehr reduced to $3,000/year if share a room with a roommate). Assuming kids at home eat the same amount of food as at school and parents are willing to continue to feed their children (as they did in high school), we are talking about extra $5,000 a year for rent only. Now, how one can say it is not affordable? (And I assume no extra weekend work during the school year). yes, if one looks at "going to University" as a "party time" and "good care-free life" instead of getting an education, he/she can be disappointing with the proposed lifestyle.

In the U.S. the tuition is about $50,000 USD per year (vs. $9,000 CAD here), but best 50 school provide need-based fellowship to cover everything (even room and board) for low-income families and most of the tuition for middle class. People in upper-middle class need to pay a lot, but they can afford it. However, "dumb" kids who cannot get into a decent university but who still want to go to school have to pay a lot since bad Universities do not have money fro fellowships. And, I think, it is the best approach: if you are not smart enough, you should not go to the University, you should go to a 2-year college and start working. 18 y.o. is too late to start studying: student should be studying at least from grade 9 and parents should make this clear to their children. if you cannot get good grades at high school, you should not go to the University. But some people do, and since they have to go to a shitty schools paying the same $50,000/year tuition, they end up with lots of debt. And this is their own fault. The system works just fine for people who are willing to put in efforts, but people who go to college just to extend their childhood have to pay.

What 40 hour per week job is available to university students on a summer break? Let's be realistic. A university student would be lucky to make $5K over the summer if they aren't in school.
Tuition can be $50K per year in the U.S. but if you go to an in state public university you're looking at about $15K per year. There's a lot more scholarship opportunities there though.

 

[K Douglas]

That's funny.

I hire people for my company.

I will NEVER hire any new graduate who has never worked when they are a student IN THEIR FIELD. I want to see career related experience as a university student. It shows a work ethic and it shows initiative.

In fact I won't even hire a kid who didn't have a job while he or she was in High School after school and weekends. "You worked at McDonalds 20 hours a week while you were in High school?"

"Perfect, no lazy person ever worked at McDonalds, you're hired"

As opposed to.....

"I didn't work when I was in High school because my parents wanted me to concentrate on school and I travelled in the summer to live in Split in Croatia to live with family there when I was in university every summer."

I'm old school like that. I'm looking at work ethic and initiative far far more than marks.

Worst thing in the world for me is to hire a lazy person with an entitled mentality. I made that mistake in the past and I won't make it again.

Agree 1000%.

 

[yermama]

If you are going to pop out kids, first make sure that you have the money to look after them for their whole life if things don't go well. Don't forget that you are the only reason they have to suffer through life.

 

[Jasmine Raine]

The reality is, IF you are a parent (and I’m guessing a few commenting are not) you will have had the debt conversation with your kids well before University. Eg: My eldest has always worked since she was old enough - that’s just how she is (various jobs - part time at a grocer, teaching swimming at the Y, at a big box store, etc). So she’s always had an active bank account, spending money, etc. Banks are VERY aggressive with products and as soon as my daughter turned 16, she was heavily sold on adding a credit card. It was to the point of being irresponsible on the bank’s part. So i had to sit my daughter down and explain how banks make money on credit cards and the danger of debt. This is after many conversations about saving.

The reality of the summer job is that the full time, 18 week job (in the City) are not available for every student. Again, using my kids - my eldest is lucky because she worked at a big box store in high school she now has a regular summer job where they try to give her 40 hours (max) a week. None of her friends are as lucky and neither is her younger sister (who will be teaching swimming at a day camp for well less than minimum wage). Further, IF you are a parent, then you would know that your kids have a social life and interests outside if school. So either your kids save 100% of what they earn, and you end up still giving them money to have a social life. In my case, i give my kids minimum savings goals when they get a job and cut off their allowance. So they had to budget spending, saving etc. The deal is, whatever they manage to save above the minimum, I match.

Anyway, I dont believe in living at home during University. Half of University is the experience of being on your own and the freedom to make choices (good and bad). So I strongly believe that the best thing for a parent is to start the RESP when your first is born and max it out. Invest it wisely and that can be the backstop for your kids. THAT is the best lesson. It allows your kids the choice of where to go, and demonstrates the wisdom of savings/investment. Oh, and the bonus for parents (and payoff) is that it gives you the chance to be an empty nester vs having your kid stay at home.

Totally co-sign to all of this.

I taught mine about CCs, by showing them the difference between using the bank or the bank using you. How you can use a CC, and your 3% cash back {shout out to TD Visa!} on any transaction, pay the balance properly, monthly, etc, and make money. Then I showed how you can end up paying 20%+ with compounded interest and showed where that all went with a quaterly report from the bank. Did the trick. Mine don't want a card.

"I'm responsible enough to know I am still not responbile enough" is what I have been told regarding getting a CC. LOL. It is an answer I adore hearing.

For the me, the money was there for the kids for school and they knew it. But only tution, and books. And I agree, at a certain age - get out and pay your way for food and shelter. It makes them learn and learn fast. You know you will be there when they fall, so it is prefectly acceptable to let them fall.

Oh and empty nesting rocks at 42! Let me tell you.