
In today’s economy, more and more parents are aware of the burden that debt can place on a person. Unfortunately, credit card companies are now targeting teens and college students and luring young adults into the credit card trap. It is imporant that teens understand how much debt can impact them later in life and parents will do well to begin to educate their teens about financial responsibility early.
Student Loan Debt
It can be very tempting to take a great deal of student loan debt while in school. The money from student loans can be used for many things other than tuition and books. Since it rarely goes directly to the school, young adult students can be tempted to use student loan money for things like laptops, electronics and other things they may or may not need as part of their educational venture.
However, students loans are exactly that – loans. And they will need to be paid back eventually. Although the qualifications to get a student loan can be quite easy, in today’s job market, the ability to make large student loan payments is not guaranteed. Many new college graduates are finding it difficult to find employment and are now faced with payments for their student loans that they cannot make.
Inability to pay student loans not only effects credit negatively, but can be a burden that follows a student for decades to come. Unlike other debts, student loans cannot be eliminated, even in bankruptcy. Before taking on student loan debt, young people should think carefully about the consequences and their potential ability to pay it back.
Credit Card Debt
One of the largest criticisms of the credit card industry is their tendency to target young adults attending college. Often, young adults do not have much experience with managing their money and do not see credit card debt as real money they have to pay back. This can be very dangerous financially.
Negative credit from irresponsible credit card debt when they were a teen can make it hard for your son or daughter to get a job. Not only that, insurance companies and many other businesses now frequently use credit reports as a method of determining whether or not to accept a person’s business and what rates to charge them for services.
Credit card and student loan debt is a serious responsibility for any young person. It is important to educate your teens about the possible consequences of taking on unnecessary debt, no matter how old they are in life. High amounts of debt can be detrimental to future accomplishments and be a problem for years to come.
Julia Myers is a writer who enjoys sharing her knowledge and advice with readers. For more on debt, Getting Your Financial Ducks in a Row offers readers information on helping your children escape loan debt.