So our kids want to fly out of the nest and advance their academic life in college. But can we afford it as costs increase? Do they have to take on part-time jobs to keep themselves afloat, or can we supplement their financial needs with college loans?
These are just some of the questions worried parents and prospective students are asking today. It’s hardly surprising when you look at the facts — a 51 percent increase in fees and tuition for public four-year colleges and a 36 percent increase for private four-year colleges in just the last decade. This, coupled with the disproportionate increases in income for families likely to have college-age children, means that more and more 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 informed of their expected financial contribution (EFC) towards their child’s continued education when applying for a place. This is calculated net of any government grants and government-backed college loans awarded to the student. Every family has numerous financial commitments and extra support for your child during college may be too much if you don’t have enough savings or disposable income. But all is not lost yet! There are other sources of financial assistance available.
How can the shortfall be covered?
Additional financial support comes in all shapes and sizes. They usually take the form of unsubsidized federal student loans, government-sponsored loans, and private-sector college loans. The latter has seen the most significant growth over the past decade (a 745% increase) and is responsible for a whopping $10.5 billion in grants to fund college education.
The available private college loans can be divided into student loans or loans for parents:
o Private college loans from banks and other funding sources.
o Private education loans from banks and other lenders.
o Home equity loans to get equity out of your property. These funds can be used to pay tuition fees.
Is it all worth it?
It’s all too easy for parents and students to balk at the idea of taking out college loans to enable them to continue their education. Raising the hard cash it will take to get them through up to four years of college seems impossible, but they just need to realize the benefits it will bring to their child and America. University graduates earn more than secondary school graduates, they also participate more in society and their children achieve higher educational qualifications.
The investment is worth it.