As we draw nearer to August, which is typically a time where most students are returning to college or are preparing to move back onto campus, many individuals often take a step back to look at their financial aid situation as both students and parents are often involved in this process and must make sure that the tuition expenses which will be required during the fall semester are able to be met. However, at this late date here in June, some forms of financial assistance may be unavailable, since some scholarships and grants may have had limited funds, so many students often turn to loans as a result of not finding the amount of financial aid they need and there are also parents who are taking advantage of loans that are available specifically for them to meet the college cost for their child.
Many parents are aware of the federal PLUS Loan for parents, which is available to help meet the cost of attending a university beyond what a student has received in other forms of financial aid, and reportedly will offer a 7.9% fixed interest rate at the present time, so some parents often view this as an affordable option if a student is short on their funds to apply to tuition, as students may have exhausted federal student loans for themselves.
However, many financial advisers have been seeing a question related to this particular type of loan over the past years, as many parents have asked whether they should save money for themselves or put their child through college with the use of these loans. It will eventually come down to a parent’s decision as to what route they take, but many advisers have often pointed out that it can be dangerous for a parent to take on a debt related to a student’s tuition, as parents are more than likely also going to be meeting other costs for their student’s college education, even if it is as simple as giving them additional money every month or so.
Most parents will help students make rent payments, purchase necessities like books, or again, simply give them an allowance every month to help them through college, but even in cases where parents may not be giving that much additional money to their student there are advisers who feel that parents are putting themselves at risk of not having enough for retirement if they take on this type of debt, as college costs can be quite expensive and may lead to a parent seeing their child graduate with not only debt of their own but the parent may have a sizable student loan repayment obligation as well.
When it comes to student loans of any kind, advisers and financial aid counselors always stress that applying for scholarships and grants early and from as many reputable sources as can be found, as well as, consulting financial aid officers at a student’s university are all going to be ways that students can increase the likelihood that they will not need to borrow, but options like parent loans or even private loans for a student or parent should be avoided if possible as these debts can be cumbersome and hinder financial security or progress for a long period of time, no matter if the student or their parents are the one borrowing. Yet, if loans are acquired, graduates and their parents should use the time during school to begin planning their repayment strategy as erasing these debts as quickly as possible will be beneficial in a variety of ways.