How Your Family Can Help Pay for Student Loans

You may have assistance to pay for your student loans, and taking advantage of that assistance will help you get out of debt. There are two options for your family to help pay your loans. First, your family can set up savings accounts for you prior to the time you enter college. Second, your family can actively seek student loans for you or with you once you have decided which school you will attend. In both cases, the assistance of your family will greatly decrease your burden.

Saving for College

One of the best gifts an adult can provide for a child is the ability to get an education. Whether you have assistance from your parents, extended family or other adults in our life, the individuals who set up a savings account for your education have given you a tremendous opportunity. Today, the cost of a college education tops $30,000 each year at some of the nation's premier institutions. Even public colleges, notoriously affordable, have raised tuition to above $10,000 a year in many locations. Saving for college is a large task to take on for any adult.

529 Savings Plans

To help adults save for the education of a beneficiary, the 529 savings plan exists in all 50 states. This is a specific education account that has dedicated tax advantages. For example, income in a 529 grows with a deferred status on federal taxes. Once the money is withdrawn from the account, it may be applied to certain qualified expenses tax free. Each state also offers tax incentives on the money in a 529. If a student attends a state owned college, the largest benefits may be recognized. Using a 529 plan, or similar college savings account, donors can make money grow much faster for a beneficiary.

Government Loans

Savings may not be enough to cover the cost of college tuition, and this is where loans come in to help. The most affordable loans on the market are often government sponsored loans through the Department of Education. Even if you receive assistance from your parents, you may qualify for a government loan. You will not meet the standards of an "independent," but you can still seek benefits from the Department of Education. Further, your parents are able to take out a loan for you through the PLUS program. These loans are easy to manage, and they allow your parents to make payments so you do not have to take the loans yourself.

Cosigned Private Loans

If government loans are not sufficient, you may seek private loans with the assistance of your family. One option is to secure a cosigned loan. In this case, the loan will be in your name. However, since you are a student with no income and likely little credit, your parents can help you get a better interest rate by cosigning on the loan. This gives you a boost in the beginning of your career, even adding a loan to your credit report to help establish your credit independently. 

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