As a parent, the only thing you would want for your children is to see them succeed. Although for the most part success emanates from obtaining a higher education, it is discouraging for most parents since the average cost of college education is quite high. Apart from that, as a parent, you have so many other obligations to meet such as paying off your mortgage, which may also put a strain on you. Fortunately, there are avenues you can pursue to ensure you can cater to your children’s educational needs without any problems. Find out the various steps you can take to help finance the education of your children even when you are in a financial strain.
- Ask Experts For Advice
If it’s your first time sending your kid to college, you would want to ask for expert advice on how to pay for their college fee. Start by talking to family members and friends who have children going to college to find out how they have been paying for their children’s college. You may also want to consult your financial advisors on how best you can handle your situation. If you have an excellent credit history, you may seek advice on what financial options are available to you, but this decision needs not to be made in a hurry.
If you are working for a relatively large firm, take a closer look at the perks and financial packages available to you. Do not shy away from talking to your human resource manager about your current position and obligations as they may be more than willing to assist you.
Before they can join college, talk to your children and advise them to meet with their high school guidance counselor. More often than not, these people have pertinent information about scholarships which may prove useful to you and your children. Scholarships must never be neglected as these can reduce the students’ bill significantly.
All in all, communication is important. Do not just sit down and wait for things to sort out themselves. As the parent, you will need to talk to various individuals to find out what options are available to you and your child.
- Help Your Child in Filling Out FAFSA
One of the most significant thing your child should consider during their college application is how best they can assist with the college fees as well. When applying for college, it is important to assist your child to fill out the FASFA. This Free Application for Federal Student Aid will allow your child or children to access federal financial aid which can be used in paying for college education.
Unfortunately, applying for FASFA can be a complicated process. Helping your child to fill out this form correctly will go a long way in ensuring they can get the most money possible. When handling this phase, it is necessary to consider it as a parent-child team effort because it can be daunting for a high-schooler to complete this process all by themselves. Guide them when they receive their loan offers and help them to understand what the loan means and how much they are going to pay back at the end. Although you may find yourself paying for some tuition costs, the FASFA will help you to cover a large part of the college costs.
- Private Student Loans
As opposed to the federal student loans that are offered and regulated by the United States government, the private loans are often issued by private entities. This means that the criteria for who would qualify will depend on factors such as income and credit score. A good number of college students may not be in a position to meet such requirements. Therefore, you as the parent may need to cosign so your child can qualify for the loan or obtain the loan at a favorable interest.
Cosigning is important as it will assist your child to get the funds they need to cater for their college education without you spending money upfront. However, although you are only a cosigner in your child’s loan, you need to remember that you’ll be on the hook just in case they refuse to pay. Before consenting to this loan, you’ll need to talk to your child about the terms of payment and how that is going to work out for both of you. It’s essential they know what their obligations will be when they decide to take a private loan so you don’t get stuck repaying the loan in the future.
The lender may offer a cosigner release after your child makes their payments for a certain period. That would relieve you of any burden and is something you need to discuss with your child and the lender before you can sign off any loan.
- College Credits in High School
As a parent, you should assist your child in earning college credits while still in high school. Just because they are not yet in college does not mean they cannot begin earning college credits. One of the best ways to cater to college tuition is taking AP exams. Each exam costs about $94 or even less for the low-income families. This is quite a significant saving as opposed to the $661 cost of college credit in a private college. These exams are usually scored from 1 to 5, and most college institutions will offer credits when the child attains a score of three or higher.
Nevertheless, you need to remember that the AP exams are not the only option available for earning college credits in high school. Your child can obtain credits through the CLEP (College Level Examination Program) as well as a dual enrollment program.
Earning substantial credits before stepping in college also increases the chances of your child completing their college early, and this means saving more on other obligations such as food, housing, and other bills.
- Review Inheritances and Gifts
When a close relative passes on and leaves their money to a friend or member of the family, it is usually with the aim that those left with the gifts will use them for meaningful purposes. Nevertheless, a loved one may set up inheritance such that the child cannot access it until they attain a certain age, which could even be after college.
If that is the case with your child, consider speaking to your attorney so you may understand what the terms of their inheritance are. You can use that opportunity to review the hardship clauses which your child may qualify for. Avoid inheritance advances or loans due to the risky terms and high rates of interest.
You might also consider seeking assistance from living friends or relatives who might be willing to offer some education fund. Encourage aunts, grandparents, and uncles to forgo the traditional gifts during holidays and birthdays so they can assist with your child’s tuition fee.
You can set up a savings plan, traditional savings account or Roth IRA where your friends and relatives can easily deposit funds.
However, you need to remember that some of the assets, particularly if they are in your children’s names, can affect your kids’ ability to qualify for any financial assistance.
- Home Equity Loans
After you have exhausted all the options available to you, getting a loan to cater to your child’s college education is your last option. It is important that your child first exhausts his or her borrowing option before you can incur any debt to pay for their education. Placing yourself in a debt situation to cater to the education needs of your child could have a disastrous impact on your financial future since there’s nothing like financial aid for retirement.
An easy approach to consider is the home equity loans. Placing your home as a collateral for a loan that would be used in paying for your child’s college education may sound extreme. However, if you are working with favorable interest, then it is an option worth pursuing (after all, you are now out of options).
Nevertheless, you need to know that with this kind of loan, you may end up losing your property if you fail to pay. Another potential risk is that the funds received from this kind of loans are taken into consideration when the school or federal government awards financial aid. As a result, this makes it harder for them to qualify for such awards.
If you are shopping for a loan, you need to remember that there are private loans out there that have lower rates, especially when your credit history is appealing and some of these are unsecured. Therefore, you will not need to put your home at risk.
When your child is in high school, just about to join college or has already joined their college of choice, you need to make preparations on how their college education will be paid. If you have no idea of where to start, you can consider the pointers mentioned in this guide to help you understand the options available to you.