Federal And Private Student Loans For Parents–Options For Federal Borrowing And Aspects Of Private Parent Tuition Loans

Student loans available for parents who are helping their child through school can be quite attractive as both federal and private student loans offer certain incentives or benefits that may look attractive to a parent but careful research is needed before any type of borrowing agreement is entered into by the parent of one of these college students. In some cases, parents have avoided paying off debts or even delayed saving for retirement in order to help their college student make tuition payments, but when a loan is thrown into this equation, problems can be present if financial hardships hit one of these borrowers.

Federal loans may be the best route for parents as they do come with low, fixed interest rates and can be more affordable in terms of repayment. Also, federal loans are known to be more beneficial for students in terms of financial hardship assistance repayment options, so parents may stand a better chance at working with a federal student loan lender if problems do arise, but any parent that may be on questionable grounds in terms of their finances will want to avoid borrowing at the present time, as there are no guarantees when it comes to these assistance options.

However, some private loans also advertise that parents who cosign a loan may be able to have their obligation discharged if a student makes payments in a timely manner, but even this can be risky. Rates on some private student loans are not fixed and, as a result, may adjust and lead to higher overall costs in the long run. This is where students need to also explore their personal options since, when it comes to borrowing a private loan, students may find higher costs and fewer assistance options if financial distress arises.

Currently, students are not entering into the best job market and some of the predictions that are being made state that we could see slow growth in the area of employment for years to come, so students who may be looking at parent loans for the fall semester of 2011 may need to explore alternative options first. Obviously, parents are usually in a position where they are willing to help their child meet college costs even if it requires borrowing a parent loan, as many feel an education can be more beneficial down the road, no matter what the cost may be at the present time.

Students do stand a better chance at getting a higher salary on average, during the lifetime of their career, if they have a college education, but when it comes to parents borrowing money to help their child through school, one of two situations is it usually present that may be a warning flag for parent borrowers. While some parents are borrowing money so that their student can graduate without any personal debt, it needs to be understood that there are numerous sources of financial aid that are free, like scholarships and grants, that may be overlooked, so this is one area where parents may want to take an active role as researching scholarship and grant options will be less costly than borrowing a loan.

Yet, if a student is in need of loan assistance from their parents this can also be a warning flag that either a student has done a little research in terms of getting free financial assistance or if they have maxed out federal student loan options, and the school that they may be attending might be beyond the price range of that students and their parents. It goes without saying that parents and students alike want to get an education from a college or university that is as prestigious as they can afford, but this does not mean that parents should go into a great deal of debt to meet these tuition costs, as more affordable universities also offer a high level of accreditation and may not cause a student loan debt situation to bleed over into the lives of their parents.