OverviewThe Debt Conversation
How to approach student loans honestly — and what most families never discuss
Chapter 9 requires a family conversation, not just a student assignment. Your student can’t document their loan balances without your help. The FAFSA strategies section may change decisions you haven’t made yet. Read this chapter yourself before assigning it — then do it together.
Chapter 9Understand Your Student Loans
Track A · Weeks 15–16
What to Watch For
Not logging into studentaid.gov. If your student hasn’t logged in and pulled their actual loan data, they have not done the chapter. Estimated or hypothetical numbers are acceptable for students who don’t yet have loans — but if loans exist, real numbers are required.
Choosing a repayment plan without understanding the trade-offs. Income-driven plans lower monthly payments but dramatically increase total interest paid. Make sure your student can explain why they chose their plan — not just which one they picked.
Treating the FAFSA section as optional reading. The FAFSA strategies — especially the grandparent 529 rule — are some of the highest-value information in the entire book. Students who skim it miss decisions that could affect thousands of dollars in aid. Discuss each strategy explicitly.
No payoff target date. “Someday” is not a plan. A student who finishes this chapter should be able to say: “I will be debt free by [specific month and year].” If they can’t, send them back to the payoff calculator.
Discussion Questions
What is your total loan balance? Walk me through each loan — type, rate, and servicer.
What repayment plan did you choose — and why? What are the trade-offs of that plan vs. standard repayment?
What does the payoff calculator show? What happens if you pay $50 extra per month?
What is capitalization — and when does it happen to your loans?
What is PSLF — and does your career path qualify? What would you need to do to pursue it?
Walk me through the grandparent 529 strategy. How does it work — and does it apply to our family?
What is your target debt-free date — and what would it take to reach it one year sooner?
- Logged into studentaid.gov — real data documented
- All loans tracked with type, balance, rate, servicer
- Repayment plan chosen with clear reasoning
- Payoff calculator used with real numbers
- FAFSA strategies reviewed and family conversation had
- Specific debt-free target date set
- Loan payment added to Chapter 8 budget
- Didn’t log into studentaid.gov — numbers estimated
- Loan tracker incomplete or missing servicer info
- Repayment plan selected without understanding trade-offs
- Payoff calculator skipped
- FAFSA section skimmed without family discussion
- No payoff date — just “10 years” or “someday”
FAFSAFAFSA Strategies — What You Need to Know
Six strategies in the student chapter that require parent action — not just student awareness
Several of the FAFSA strategies in Chapter 9 are family decisions, not student decisions. Read each one below and discuss which apply to your situation before your student presents their work at Milestone 4.
⭐ The Grandparent 529 Rule — Act on This Before Your Student Enrolls
A 529 account owned by a parent is reported as a parental asset on the FAFSA and can reduce aid eligibility by up to 5.64% of its value annually. A 529 owned by a grandparent is no longer reported on the FAFSA as of the 2024–25 application — distributions are not counted as student income. If grandparents are planning to contribute to college costs, having them own the 529 rather than you can meaningfully protect your student’s aid eligibility. This is a planning decision that needs to happen before enrollment, not after.
File October 1st — Every Year
Many states and institutions award aid on a first-come, first-served basis until funds run out. Filing in January instead of October can mean the difference between a grant and a loan. Set a recurring calendar reminder on September 30th so you’re ready to file the moment the window opens. This applies every year your student is enrolled.
Prior-Prior Year Tax Returns — Know What Year Is Being Used
The FAFSA uses tax data from two years prior. If your family had an unusually high income year recently — a bonus, a business sale, an inheritance — it may affect aid even if your current income is lower. In that case, contact the financial aid office directly and request a Professional Judgment review. They have authority to adjust the aid package based on current circumstances.
Retirement Accounts Are Not Counted
401(k), IRA, and Roth IRA balances are not reported as assets on the FAFSA. This is another reason to prioritize retirement savings — money in a retirement account doesn’t reduce your student’s aid eligibility, while money in a savings account does.
Appeal the Aid Package If Circumstances Have Changed
Financial aid offers are not final. If your family’s situation has changed since the tax year being used — job loss, divorce, major medical expenses — contact the financial aid office and request a review. If a competing school offered more aid, that offer can sometimes be used as leverage. Be professional, be specific, and ask.
Never Miss the Deadline — State Deadlines Are Earlier Than Federal
The federal FAFSA deadline is June 30th of the academic year, but many state and institutional deadlines fall as early as February. Check your state’s specific deadline at studentaid.gov and add every deadline to your family calendar — not just the federal one.
After your student completes Chapter 9, sit down together and go through the FAFSA strategies one by one. Which ones apply to your family? Are grandparents planning to contribute — and if so, who owns the 529? Did you have an unusually high income year recently? Are you filing the FAFSA as early as possible?
These are not just educational questions for your student. They are planning questions for your family. The chapter puts the information in front of you. What you do with it is up to you.
WarningA Word on Credit Cards
The debt trap most likely to derail your student in their first year on their own
Student loans are the debt they arrived with. Credit cards are the debt they’ll create themselves. Your student just spent two weeks understanding compound interest and what it costs to borrow money over time. Make sure they apply that same lens to credit cards before they leave home — because the offers will start arriving immediately.
The math is worse than student loans
Federal student loan rates run 5–7%. Credit card rates run 20–29% APR — and that’s not a penalty rate, that’s the standard. A $3,000 balance at 24% APR, paying only the minimum, takes over 14 years to pay off and costs more than $4,000 in interest alone. Make sure your student runs this calculation — not just reads about it.
Credit cards are not emergency funds
The most common rationalization: “I’ll use the credit card for emergencies and pay it off.” This works exactly once, if the emergency is small. The second time, the balance doesn’t get paid off. Then a third charge goes on. This is how a $500 car repair becomes $3,000 of revolving debt within a year. The answer to emergencies is a funded emergency fund — not a credit card.
Credit cards can be useful tools — with one rule
Used correctly, a credit card builds credit history, offers purchase protection, and earns rewards. The one rule: never carry a balance. Pay the full statement balance every month, every time, without exception. If your student can’t commit to that rule yet, they’re not ready for a credit card — and that’s fine. A debit card builds the same spending habits without the interest risk.
The first offer will look attractive
Credit card companies market aggressively to young adults — especially college students. Signup bonuses, travel rewards, and “no annual fee” language make the first card feel low-risk. Make sure your student knows: the rewards are only worth it if the balance is paid in full every month. One month of carrying a balance erases months of rewards.
Ask your student: “If you had a $3,000 credit card balance at 24% APR and paid the minimum each month, how long would it take to pay off — and how much would you pay in total?” If they don’t know, have them calculate it before moving on. Seeing the real number — not just hearing a warning — is what makes it land.
Then ask: “What is your rule for credit cards going to be?” A student who can articulate a clear, specific rule before they leave home is far less likely to end up in trouble than one who just knows credit cards are “dangerous.” Vague awareness doesn’t protect anyone. A specific rule does.
MilestoneChapter 9 Milestone Review
Before moving on to Chapter 10
Confirm these before moving to Part Three.
The question to ask yourself here: Does my student understand the full cost of their debt — not just the monthly payment, but the total interest they will pay over the life of the loans? If they haven’t run the payoff calculator and looked at that total interest number, send them back. That number changes how people think about debt in a way that monthly payments alone never do.