Can you remember the day you found out that you had been accepted to the college of your choice? The happiness and the relief that washed over you in that moment was priceless. As you settled down to the reality of getting ready to leave home; you suddenly realized how expensive college would be. that What you didn’t see in the moment that you received that letter, was the look on your parents faces. Although they were happy for you they also understood the implications of paying for you to go to school. It meant sacrifice and perhaps slowing down or putting off paying into their retirement.
Many parents are faced with this dilemma every year as their children prepare to head off to college. Even with some financial assistance, the out of pocket cost can be phenomenal. The cost of college has gone through the roof in the past few years and changes to student loans guidelines have made it almost impossible for an incoming freshman to qualify for enough student loan money to pay for college. This has caused many parents to partner with their children to take on this debt. The lenders offering these loans have a win-win situation. Not only do they have the children obligated to pay back these loans, but the parents as well.
Depending on which school your child has decided to go to you could very well owe as much on student loans as you do on your mortgage. Even worse, if your child is unable to pay the loans; the lender will be looking to you for payments. This can potentially become a vicious cycle which takes a toll on the entire family. One lending institution is Sallie Mae, they will loan you all the money that financial aid won’t cover depending on your credit. They offer a very interesting incentive for parents. If the student pays on the loan for one year without missing a payment, the parents can be released from the loan. For some parents this should provide a bit of stress relief.
This is a great reason why parents with young children should start saving for college now. There are many options available for this purpose. There are 529 College Plans, which are available in all states to help parents pay for school. The great thing about these loans are: anyone can pay into the loan, a parent can pre-pay for college using today’s rates, and if the child decides not to go to school the money can be used on another child or the parent. There is also the Coverdell Education Savings Account, this is a tax deferred account created by the US Government to help families fund their children’s education. There are also regular savings accounts and savings bonds that can be used for educational purposes.
Parents hate student loans because even though they send a child to school and allow them to morph into adulthood; they are still reminded by student loans that their young adults are still children. And sadly for parents, children they are still responsible for.