So our children want to fly away from the nest and continue their academic life in college. But with rising costs, can we afford it? Will they have to take part-time jobs to stay afloat, or can we supplement their financial needs with college loans?
These are just a few of the questions concerned parents and aspiring students are asking today. It’s not surprising when you look at the facts: a 51% increase in tuition and tuition costs for public four-year colleges and a 36% increase for private four-year colleges in the last decade alone. This, coupled with disproportionate income increases for families likely to have college-age children, means that more and more often parents or students themselves are turning to direct loans or private college loans for help.
Why do parents and students need extra help?
All parents and families are made aware of what their expected financial contribution (EFC) will be to their child’s higher education when applying for a place. This is calculated minus any government grants and federally backed college loans that will be awarded to the student. Every family has numerous financial commitments, and extra support for your child through college may be too much to bear if she doesn’t have enough savings or disposable income. But not all is lost! There are other sources of financial support available.
How can the deficit be covered?
Additional financial support comes in all shapes and sizes. They typically take the form of federal unsubsidized student loans, state-sponsored loans, and private-sector college loans. It is the latter that has seen the most significant growth over ten years (a 745% increase), accounting for a whopping $10.5 billion in aid used to fund college education.
Available private college loans can be divided into student loans or parent loans:
student loans
o Private college loans from banks and other funding sources.
parent loans
o Private education loans from banks and other financiers.
o Home Equity Loans to withdraw equity from your property. These funds can be used to pay university fees.
Is it all worth it?
It’s all too easy for parents and students to resist the idea of taking out college loans to continue their education. The cash needed to see them through up to four years of study may seem impossible to come by, but they just need to realize the benefits this will bring to their child and to America. College-educated people earn more than high school graduates, they also participate more in society, and their children will also attain higher levels of education.
The investment is worth it.
