Student Loan Advice for Parents

Most people today cannot afford to fully fund the entire cost of college or graduate school without a student loan. A few very exceptional and gifted students are fortunate enough to receive full academic or athletic scholarships. But the vast majority of students will need to secure a student loan to make the possibility of attending college a reality. For most people this is a major financial undertaking Therefore parents are often faced with the dilemma of finding the best ways to help their children. There are smart ways for parents to help. But, there are also some things that parents do that are not very smart financially. Here are a few practical ideas that can help parents avoid making some very costly mistakes:

Complete a FAFSA

The free application for federal student aid (FAFSA) is the starting point to identify federal loans and grants. It is very detailed form, which requires a lot of personal information from parents. It requires tax return, bank account, savings and investment information. This information is used to award needs based federally back financial assistance. Many parents assume that their income is too high to benefit from these federal programs. Therefore, they do not complete a FAFSA. However, many families with substantial income still may qualify for financial. Most families qualify a low-interest federally-backed student loans. It is also important to note, that many colleges require a FAFSA for the merit scholarships they award. If you do not complete this form your child could miss an opportunity for scholarship. Therefore, even if you think you may earn too much, it is still a good idea to complete a FAFSA.

Start Early

Many financial assistance programs have a limited amount of resources When these resources are exhausted the program is closed. Therefore only the first groups of applicants are considered. The other applicants do not receive consideration. Make sure to submit your FAFSA early. Taking advantage of all potential sources of aid can greatly reduce the amount of the loan you will need.

Avoid Liquidating Savings and Retirement Accounts

Loans are available for education. However, there are no loans for retirement. Sometimes due to an unexpected illness or employment interruption, savings and retirement accounts cannot be replenished as planned. Therefore parents should avoid jeopardizing their long-term security to fund a child's education. There are always alternatives. Make sure you have considered all of your choices including private loans. Education loans are usually a much better choice than tapping into retirement or long term savings.

Involve Your Child

One way emphasize the importance of graduating on time is to allow your child share in the cost of their education. Consider having your child take out loans. You can always help with the payments when its time for repayment. Students who take out loans have a greater awareness of the cost of their education. This can serve as motivator to help them focus on their studies and graduate on time. This will allow you and your child to avoid the extra expense of an additional year of school.

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