This is Why We Need to Talk About Money

I used to have a blog dedicated to personal finance, and I still talk about finances here for one reason. I believe it is very important that we end the stigma on talking about money. Money is a necessity in the current world and not understanding it puts people at a significant disadvantage. If the only person who ever talks to you about how mortgages work is the shady guy trying to sell you a bad mortgage, then how are you supposed to know it’s a bad mortgage?

On some level, the student loan crisis has been great for this. It has gotten more people talking about the costs of an education, and what people can realistically expect to earn after graduation, and how that amount of debt can hamper a future, even if you got an amazing education. The problem with most of the articles I have seen on the student loan crisis is that they are written by the poster children for bad decisions.

You read the articles, and even if, like me, you are sympathetic to the cause, it is hard to see how the situation is anything but the fault of the person involved. And this latest article on Slate is not much different. But there are some key elements that make it a better article than most, and one key thing that can be taken away from it that actually makes it a helpful article.

While the author still blames his school and the “dream factory” that is higher education in this country for his outsized debt, he at least admits that he and his parents made some bad decisions.

I will be honest, it is hard for me to have much sympathy for someone who just assumes they can go to any college they want and not really think about the cost. This is because while my brother and I were both raised with the expectation that we would go to college, included in that was the understanding that we would also be responsible for paying for our college. The cost of my education was not something I was allowed to ignore or pretend did not exist. And it was probably the greatest gift my parents ever gave me.

And that, for me, is the key thing that can be taken away from this article – the need for parents to talk to their high school students about the cost of college. Even if, as parents, you can afford to pay for your child’s education, I think it is hugely important for the kid to understand what that cost is.

In this article, the parents wanted to hide their own financial state from their son. This led to them, along with the school, encouraging their son to sign for private student loans, loans that ended up equaling around $100,000.

I am not a fan of private student loans, much like I am not a fan of interest only mortgages. There are some cases where they might actually be the right choice for a person, but those cases are actually pretty rare, and they are never the right choice for someone who cannot tell you exactly why they are the right choice for them.

This piece does a better job than most in helping the reader understand why those loans are awful. If you have a co-signer and that co-signer dies, it used to be that your loan could instantly be sent to collections and you would owe the balloon amount. So if Grandma co-signed with you, and then Grandma does what all grandma’s eventually do, dies, suddenly you are stuck with a $30,000 lump sum due instead of your monthly $500. And that is a bit of information that is usually buried in the fine print on the loan paperwork, so not something most people would realize.

So while I will happily take this author to task for not knowing how much he owed until he started getting the repayment slips (because not only do the papers you sign for loans clearly state how much you are borrowing for each one, you are given copies of the paperwork for your records), I fully appreciate the awfulness of the terms of the loan.

But really, this is exactly why you talk to your children about money. College is often the first adult decision they make, one with massive financial consequences. We should not expect them to make it in a vacuum. Our children deserve to know what an education costs, and what it will cost them.

Because it is not just enough to not want our children to end up with an extra $100,000 in debt. We need to help them understand finances. We need to teach them to read the paperwork for themselves and not just sign what is put in front of them. They need to know what a loan means and fully grasp the terms. And if we cannot teach them that ourselves, we need to let them see us ask the questions.