Should Parents Help Pay for College?

Should Parents Help Pay for College?

It’s a question many parents are asking themselves – should I pay for my children to attend Washington State University? The answer comes down to a number of factors. There’s no cookie cutter answer, so it comes down to a number of factors. Most parents choose to cosign a federal loan, while others scrape up every little bit of cash they have left over and stash it away into a savings account. The things you want to consider is how much money you have, how much is needed and whether you can afford making payments.

The following steps should be taken to see if it’s a good idea to pay the college tuition for your child.

Determining How Much is Needed

Before you cosign a private student loan, you need to know exactly how much is needed to cover all the costs. Here’s how you can do that:

  • Figure out how much it will cost for books, tuition, clothes, housing expenses, entertainment and food. The living costs will vary depending on if they will be at home, in an apartment off-campus or in an on-campus dorm.
  • Subtract the amount of federal aid your child will receive.
  • Subtract any money you receive from grants, scholarships and part-time jobs your child will have. Be prepared to cover the costs if the job ends, though.
  • Go to the financial aid officer to see if your budget is sufficient for your child’s education. You can also check to see if your child is eligible for any other bursaries or scholarships.

Assess the Financial Risk

It’s impossible to predict the future, so the only thing you can do is prepare for it. You’ve determined how much money you can borrow, but how will you repay it? Research your child’s chosen field to see their salary potential. If the field is low-paying, your child should reconsider their choice or wait to apply when there will be more grants and scholarships available to help cover the funds.

Consider Being a Cosigner On a Private Student Loan

Once you know how much will be needed to cover your child’s education, you can start looking at viable options for paying them. One option is to cosign a private student loan. What this means is that you will be responsible for the payments if your child defaults. Don’t be a cosigner if you don’t have the means to take over the payments when necessary.

As you’re shopping around for private student loans, ask the lenders about their minimum and max payments for your particular credit rating. In most cases, these loans come with variable interest rates, which means they fluctuate throughout the year. Make sure to shop around as much as you can before making a decision. Also, ask about possible insurance coverage that will protect your assets in the event the loan can’t be paid.

The only other option is to lend your child the money yourself. Funding your child’s education is likely a top priority. If your child is unable to handle the expenses themselves, then it’s a good idea to plan how you can help.

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