What Parents Need to Know About Student Loans
Its important for parents to understand the ins and outs of student loans, said Jeremy Wine, student loan supervisor for Take Charge America, a national nonprofit credit counseling and student loan counseling agency .
Many parents dream of sending their children off to college – to
earn a degree, launch a successful career, and make a healthy, happy
life for themselves. For many families, this means taking out loans to
cover the cost of tuition and expenses.
“It’s important for parents to understand the ins and outs of student
loans,” said Jeremy Wine, student loan supervisor for Take Charge
America, a national
nonprofit credit counseling and student loan counseling agency. “As
long as parents are clear on the terms, they can help their
college-bound children begin adulthood on the right foot without risking
their own financial well-being.”
Wine shares five things parents need to know about student loans:
-
FAFSA: First things first, students should complete the Free
Application for Federal Student Aid to determine their eligibility for
federal loans and grants. Students from low-income families, for
example, may qualify for a Federal Pell Grant worth up to $6,095
annually. -
Federal vs. Private: One question students and their parents
should consider is whether they should take out federal or private
student loans. Compared to private loans, federal loans typically
offer lower interest rates along with better repayment options, like
income-driven repayment and postponement of payments.
Additionally,
private lenders usually require a co-signer – typically a parent –
meaning parents are on the hook for any late or missed payments. It’s
risky business, as any issues with a student’s repayment will damage
parents’ credit scores and may prevent them from taking out other
loans in the future. -
Parent PLUS Loan: Parents who want to help pay for college but
don’t have the money saved can also apply for a Parent
PLUS Loan. Among the benefits, this loan offers a fixed interest
rate, flexible repayment terms, and a tax deduction on interest up to
$2,500. Unlike other federal student loans, the PLUS loan requires a
credit check. -
Repayment Calculator: How long will it take to repay a student
loan? Too few people consider this question before borrowing money for
college. Using a student
loan payoff calculator can give parents and their children a sense
of future monthly payments, and will also encourage students to think
carefully about their career path and earning potential. -
College vs. Retirement: Paying a child’s college expenses is a
very generous – and very pricey – endeavor. It’s important for parents
to take a pragmatic approach – helping their children choose an
appropriate school at an affordable cost – rather than setting their
hearts on a “perfect,” and unjustifiably expensive, college. Moreover,
they’re wise to consider their own finances before taking out a loan
for their child’s education. This is especially true for people who
already have debt or whose retirement accounts are too small. In such
cases, parents should put their own financial needs first.
For information about student loans and repayment options, visit Take
Charge America at studentloans.takechargeamerica.org
or call (877) 784-2008.
About Take Charge America, Inc.
Founded in 1987, Take Charge America, Inc. is a nonprofit agency
offering financial education and counseling services including credit
counseling, debt management, student loan counseling, housing counseling
and bankruptcy counseling. It has helped more than 1.6 million consumers
nationwide manage their personal finances and debts. To learn more,
visit www.takechargeamerica.org
or call (888) 822-9193.
View source version on businesswire.com: https://www.businesswire.com/news/home/20190115005164/en/