Is your high schooler thinking about taking out student loans? Here are some things to talk to them about.

Getting ready to attend college is an exciting time in your child’s life. They decide what school they want to attend, what major they want to pursue, and many other significant life decisions — one of them being how they’re going to pay for their college education.

With the cost of college steadily rising, it’s important to discuss all financial aid options available to them, one of them being student loans.

Below is a brief explanation of some of the basics of student loans. Discuss them with your teen and make sure they understand the requirements and consequences of taking a loan out at such a young age.

A student loan is borrowed money, plus interest.

Student loans are loans specifically designed for students, usually younger individuals with limited income, assets and/or credit, to attend higher learning institutions. Student loans are a type of unsecured debt – meaning they are considered “riskier” to most lenders because they are for these younger individuals. Because they are considered “risky,” student loans generally come with higher interest rates, higher payments, and stricter terms. Make sure your teen knows they’ll be paying back more money than the loan amount they received.

If they don’t pay it back, it could impact their future, including purchasing a home or starting a business.

Not paying their loan back by either not meeting minimum payments or stopping payments altogether can be detrimental to their credit. Not only can it lower their credit score, but it can also make it difficult for them to get a loan for a  car, house, or business. If they have a federal lender, the government can even garnish their wages or take their tax refund as payment toward the loan. Make sure your child is aware of the consequences of defaulting on student loans.

Shop around and know what you’re eligible for.

There are hundreds, if not thousands, of student loan lenders available to students. However, not every lender is necessarily a good choice for your child. It’s essential to research any lender your child is considering since several have come under fire in recent years for predatory or misleading lending practices.

Depending on your income, your child could be eligible for various levels of federal financial aid to pay for college. So, make sure to do your research. Check with the college or university’s financial aid office to find out what your family qualifies for.

You don’t have to use student loans.

There are a number of other ways to pay for college. Explain to your child that they don’t have to run off to college at 18 and start their adult life in a mountain of debt. Delaying college and working to save money to help pay for classes is a very responsible route – as well as applying for scholarships, work-study programs, or going to school part-time to keep the university bill lower.

What makes college so exciting is that it’s the beginning of the rest of your child’s life. This is their first time making adult decisions (with adult consequences) totally on their own. So, arm your child with the information needed to make the decisions that are best for them.