Ah, those good old college days! Remember the tough professors, the new friends, the escapades that now make you laugh (or groan)? But for many students and their parents, college is more than that–it’s a source of conflict about money, love, support, nurturing, and independence. As a new academic year approaches, here are some difficult situations you may encounter in working with parents, grandparents, and their offspring.
My client, a divorcee, is worried about letting her only son go off to college several hundred miles away. He has not been good at managing money, and she fears he may get in over his head with credit card debt. How can I help her? There are no quick answers to this serious problem. Many college students with little or no money experience are inundated with credit card offers. Some do end up deep in debt, and may even be forced to quit school to pay off their bills–a tragedy that could be avoided with better financial education up front.
Encourage your client to share her fears and concerns with her son at a non-stressful time and in a non-confrontational way. For example, she might say something like “Honey, I’ve heard so many horror stories about college kids piling up hundreds and thousands of dollars in credit card debt. Let’s talk about how I can help you avoid this situation.” If she herself has not been the best role model for financial prudence, she should be open about it. The main thing is to help the son learn to set limits on his spending without making him feel like what therapists call “the identified patient”–the member of the family who’s identified as the one with the “problem.” Suggest that they discuss what’s important to him, and how his spending choices may affect whether he meets these goals or not. (If you’re willing, you might volunteer to meet with him alone to talk about this.) Your client may also want to take him to a local meeting of Debtors Anonymous, so he can hear for himself how overspending and debt can wreck otherwise functional lives. From a practical standpoint, the two of them have several choices. For instance, they can head off the whole issue of indebtedness if he uses a card that is pre-loaded with cash, such as Visa Buxx or MasterCard’s iGen. Or he might start out with a debit card and graduate to a credit card after showing that he can spend responsibly. I would suggest that the statements be mailed to his mother, and that he send her a check to pay them off. That way, she can monitor the balance. Consider doing everything you can to support your client before her son goes to college and gets overwhelmed with debt. Together, the two of you may be able to avert a financial train wreck.
My client couple is fighting about whether or not to pay their daughter’s student loans after she graduates. They funded the first two years of college, and she borrowed to pay for the last two. The mother has told her daughter that they will repay these loans. Knowing her husband is against this, she didn’t consult him before making this promise. Now he insists that their daughter is responsible for paying back these debts. Neither parent will give way. Help! What is fueling the disagreement between the mother and father? Is it a difference of philosophy about parents’ role in educating their children, perhaps based on different cultural backgrounds or upbringing? Or is it strictly a financial issue: they just can’t afford to pay any more without sacrificing their own security?
Once you have encouraged them to get to the root of their feelings and examine their financial situation, you may be able to help them find some common ground. The mother probably needs to acknowledge the unfairness of promising payment without first getting the father’s agreement. If they don’t have the resources to make good on her promise, the daughter may need to step up to the plate and pay off part or all of her loans. A financial and emotional compromise that might work for all parties would be for the couple to pay half or a third of the loan amount, while the daughter pays the rest. It would be a good idea to suggest that these clients try to work out their differences in the future, with the help of a money therapist or couples counselor if need be, to avoid dragging their child into the midst of their own unresolved conflicts.
A recent marriage was the second one for both of my clients, each of whom has a child in college. Her son is going to a state university, while his daughter is enrolled in an expensive private college. The difference in the cost of education is causing some friction between the spouses, even though they entered the marriage with fairly similar net worths. How can I help them deal with this?