Thus, our children want to fly away from the nest and continue their school life at university. But with costs escalating, 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 parents and aspiring students are asking these days. This is not surprising when you look at the facts – a 51% increase in tuition and fees for public four-year colleges and a 36% increase for private four-year colleges over the last decade only. This, coupled with disproportionate increases in income for families likely to have college-aged children, means that more and more often parents or students themselves are turning to direct loans or loans from private colleges to acquire help.
Why do parents and students need extra help?
Each parent and family is informed of their expected financial contribution (EFC) towards their child’s further education when they apply for a place. This is calculated minus any government grants and federally supported college loans the student will receive. Every family has many financial commitments, and extra support for your child through college might be too much to bear if you don’t have enough savings or disposable income. But all is not lost! There are other sources of financial support available.
How to cover the shortfall?
Additional financial support comes in all shapes and sizes. They normally take the form of unsubsidized federal student loans, state-sponsored loans, and private sector college loans. It is the latter that has experienced the most significant growth over ten years (up 745%) and represents the modest sum of $10.5 billion in aid used to finance college education.
Private college loans available can be divided into student loans or parent loans:
o Private university loans from banks and other funding sources.
o Private education loans from banks and other donors.
o Home equity loans to tap into the equity in your property. These funds can be used to pay tuition fees.
Is all this worth it?
It is too easy for parents and students to balk at the idea of taking out college loans to enable them to continue their education. The cash needed to see them through to four years of education may seem impossible to raise, but they just need to realize the benefits it will bring to their child and to America. People with a college education earn more than high school graduates, they also participate more in society, and their children will also achieve higher levels of education.
The investment is worth it.