How parents can borrow wisely and bridge the college financing gap
Posted: July 11, 2022 | Word Count: 537
Your child has decided on a college, signed up for freshman orientation, and now comes the next hurdle: paying the tuition bill.
According to a survey by College Ave Student Loans, 74% of parents surveyed found the cost of college to be surprisingly high. Between tuition, room and board and other expenses, many families have a financing gap, even with the help of scholarships and grants.
If you're wondering how you'll afford your child's education, check out these financing options to cover any remaining college expenses before they start school this fall.
When savings aren't enough
According to the survey, 95% of parents are helping or planning to help their child pay for college. How do they plan to afford the cost? About 59% plan to use their income and savings to help cover some of the costs left after grants and scholarships.
Some (43%) will use 529 college savings accounts to help pay for college, but with the rising costs of tuition and room and board, many families are still coming up short. Some parents plan to take up a second job and some are considering using their retirement account or expect their child to contribute.
How to quickly bridge the financial gap
While it's noble for parents to want to help their children, they don't need to forgo their future to help their child build their own. One of the easiest ways to immediately cover the college financing gap is through loans designed to help pay for a college education. It can be stressful paying for college and saving for retirement, but you can balance these two needs through responsible borrowing.
While you may have previously avoided taking out a loan for fear of you or your child going into debt, many loans have multiple repayment options.
"It can be scary to apply for a student loan, but it doesn't have to be difficult," said financial expert Mark Kantrowitz. "Student loans are a tool to help parents give their children a bright future."
By now, your family should have completed their Free Application for Federal Student Aid (FAFSA). Doing so not only considers your student for scholarships and grants, but also gives them access to federal student loans, which they can take out in their own name at a low fixed rate. If you need to borrow, federal student loans in the student's name should be taken out first as those come with unique benefits and protections, not offered by private lenders.
If you still find you have a gap to bridge, private student loans are one option to explore. Before helping your child take out a private loan, research and find the best option for your family. A student loan calculator can help you estimate the cost of the loan and potential monthly payment to find a repayment plan that fits your specific financial situation.
College Ave Student Loans can help you breathe easy and stress less. The application process takes less than three minutes, and customer service is ready to answer any questions you may have about the process. Private student loans have multiple repayment options and offer competitive interest rates.
For more information and tips about financing your child's college education, visit CollegeAve.com.