Tempted to Co-Sign a Student Loan? Offer these Options Instead

I’m always unsure how to respond when my daughter calls or texts me. Sometimes she vents about her work, her boyfriend, or her daughter. Sometimes it’s about the unfairness of life. Often times, it’s about money—and if I can “lend” her a couple hundred. The most recent call was to ask if I would co-sign on a student loan.

Following my shocked silence, she continued to tug my heartstrings about her limited budget, costs of school supplies, clothing, day care, and for additional oomph—“and I’m not scheduled enough hours this week” into her plight. It’s no good to toss in my own anorexic budget because it falls on deaf ears. Besides, I want to help!

However, it just isn’t possible. According to a 2014 study by the United States Government Accountability Office, nearly 40% of federal student loan debt belongs to those over 65, whether their own debt or that of an adult child. Adding to the complications are our own struggles with eliminating debt, lowered income, caregiving for parents or a partner, and perhaps that same adult child living at home.

So how can we avoid additional debt and/or risk while becoming the hero? Consider one or a combination of these ideas:

Buy books: text books are a huge expense for college students and, once tuition is paid, the sticker shock of books and supplies strikes. You can offer to cover these costs and take on the hassle of ordering, renting, shipping, and more. There are several text book rental sites available for some significant discounts.

Pay for a tutor: once your adult child has plunked down hundreds of dollars for a single course, it’s critical she passes! If your student starts to express concerns, suggest a tutor immediately and offer to pay. You don’t want your child to have to pay—or repeat—any class, especially with today’s tuition costs.

Offer to tutor: some coursework is basic (intro to math, English, science, history, etc,) so if your student needs help, offer to tutor. This can be done in person (if local to your child and her school), or virtually. Either option saves time, money, and highlights you as the lifesaver.

Become a student’s helper: offer to care for grandchildren in the evening, clean house, fix meals, handle sick children, walk the dog, and so forth. Offer the stressed student time off and gift your child with a gift certificate for a dinner and movie. Maybe offer a birthday gift certificate to a baseball game, a massage, or something special.

If you live out of town: many of the ideas and services above can be handled long-distance. If you are unable to help locally, search online for mother’s helpers, dog walkers, house keepers, and other needed tasks. These services are available at a reasonable fee and offer a win-win for you, your adult child, and the business owner.

An added bonus: with entrepreneurialism a hot activity for Boomers and GenXers, you can offer similar services to out of state students.

We love and want to help our children through their life journey, but co-signing loans adds an element of debt and risk few want to encounter. Implement these tips to help your adult child avoid deep debt with these ideas and be the lifesaver!

Kristen Edens
Making Midlife Better

What Will YOU Do When Business Disaster Strikes?

I must lose myself in action, lest I wither in despair. – Alfred Lord Tennyson

Entrepreneurs accept a few truths:

  • The potential for failure
  • A willingness to take chances and accept risks
  • Don’t quit easily—pivot, regroup, rebrand
  • Fail fast & learn from mistakes
  • Believe the risk is worth the reward
  • Will take more time than originally planned
  • Will take more money than originally planned

If we aren’t aware of these certainties as we enter an entrepreneurial pursuit, we soon experience and learn to accept them.

Try as we may to prepare for and avoid the risks and failures, they happen. It’s a part of the journey. Often, these failures present themselves as a financial threat. If you find yourself in that situation, here are some action tips to work you through the snag.

Review your business expenses

What areas can be shifted? Can you eliminate or reduce one service or combine to save money?

Are there overlapping services that can be clarified? If outsourcing business tasks, review with your service providers to ensure that they complement each other rather than compete.

If you attend networking or professional events, can you arrange ride share to save on gas and vehicle expenses? If you attend events that require an attendance fee, consider postponing these until the situation is resolved.

Hold a virtual coffee meeting. Hangouts, Messenger, and Skype make this possible and saves time, money, and traffic headaches for both parties.

Lifestyle review

Similar to the business review, what can be reduced or revised to cut costs to get you through the crisis? This doesn’t mean depriving yourself of necessities, but perhaps instead of going to the theater every weekend, you check out a movie from RedBox (if available), rent a movie from the library, or have an at-home movie night with friends.

What is the state of your emergency fund? If it has been accessed for an unexpected event, is there room for a little more? Can it (and you) spare 10% for the situation?

How soon can you replenish your emergency fund? Make it a habit to contribute regularly and as soon as possible once the crisis is over. Consider: how would you be impacted without the emergency fund?

Additional thoughts

  • Keep emergency fund active; maintain ½ balance
  • Maintain communication with support team & family—not everyone needs to know; just key players & investors
  • Review budget often (monthly is idea, quarterly at a minimum)
  • Have a backup plan: anticipate potential disasters and plan accordingly. Adjust as situations come and go, or if other ideas emerge
  • Fail fast
  • Recover faster
  • Recovery includes free-time to clear the brain which allows new ideas & possibilities in.

Entrepreneurs are a determined group of energized people who understand and accept the risks. If you encounter a crisis, the sooner you take action and implement a recovery plan, the sooner you will be charging forward again.

Got additional ideas to share? Let’s hear them in the comments below.

Kristen