Summary: Suggestions for how to balance your dreams for your child’s future with the realities of a limited budget – and how to talk about it with your kid. Includes information on Parent PLUS Loans, co-signing, and other important topics.
Time to read: 8 minutes
Who this is for: Parents
Dreams vs Dollars: A Parent’s College Dilemma
You’ve got a kid about to enter college. Like any parent, you want the best for them: a great education, a bright future, and the launchpad of a career that could make them secure and comfortable for the rest of their lives. Besides, you want your kid to have it better than you do.
But that raises a question: How good do you have it? With college costs rising much faster than wages, will you have the money down the road to pay off a long-term college loan? If you borrow a sizable amount of money in the name of securing your child’s future, will you be sacrificing your own? And how do you tell your kid that while their potential is limitless, the funding to support their dreams isn’t? These are issues many parents dread to face. Unfortunately, there are loan options out there that make it easy to push the problem years down the road, until the accumulated debt has gotten so big that it drags down every other part of life. But don’t worry. You can help your child get a good college education without risking all the money you might want available for things like retirement, or health emergencies, or even, someday, grandchildren. With that in mind, College Money Matters has put together five of our most requested Pages for Parents. Some are videos, some are articles, but all are designed to give you the insight and approach you need to start an open and informed discussion with the college-bound student in your family.
Parent PLUS College Loans: How Much is Too Much Love? The US Government created Parent PLUS loans for parents who wanted to pay for part or all of their child’s undergraduate education. Unfortunately, parents who’ve taken out these loans now owe the government more than 98 billion dollars – and 1 in every 8 will wind up in default. This in-depth article reveals how you can avoid falling into the Parent PLUS trap.
What every parent or relative should know about co-signing a student loan If you’re helping someone to qualify for a student loan by putting your name on that loan as a co-signer, you should know what you’re in for – especially because you’re the one responsible for making payments in case they can’t, or they don’t, or they just forget. Read this article to get a solid understanding of what co-signing means. You may even want to share it with anyone who asks you to co-sign.
The Top 5 Things to Know about College Acceptance Letters It’s a proud moment when your kid gets accepted to a college, and the letter announcing that also details how much financial aid the school is offering. But it’s important to know how much is free money (as in scholarships and grants) and how much are loans that must be paid back, plus interest. This short video helps you and your college-bound student understand that, and the page it’s on provides links to a College Cost Worksheet and Student Loan Calculators.
Is there a right amount to take out in loans? The general advice about student loans is that the total amount borrowed, over all 4 years of college, shouldn’t be any more than the student would expect to make in their first year as a professional. This chart helps you and your child estimate that number, by listing the average starting salaries of a wide range of different jobs.
Calculating your costs of college In under 4 minutes, this video takes you through the many costs, both big and little, that add up to the total cost of college. That includes tuition, room and board, books, transportation, health insurance, and other expenses that make up a college’s COA – its cost of attendance.