Many parents are not aware of the benefits of taking out a parent loan to help supplement their child’s college tuition. All parents should be responsive to this financial responsibility, as investing in your child can only benefit you.
When your children can be working out on their own, you do not want to have them sitting at home and leeching off you.
Helping your children by means of a better education will given them a head start in the work force, so that they can be independent of your financial support. It can only make better your finances and at the same time, help your child.
Concerning the college tuition, parents of dependent students can take out loans to supplement their child’s financial requirements.
The Federal Parent Loan for Undergraduate Students lets parents borrow money to cover any costs. It covers up to the full cost of attendance. Either private lender such as banks (FFELP) can offer these loans or the funds are provided by the government (Direct).
Following are the five primary areas for falling into financial aid.
Step 1: Free Application for Federal Student Aid (FAFSA)- Free Application for Federal Student Aid (FAFSA) is the primary form necessary to qualify for federal student aid.
Step 2: Search for Scholarships
Step 3: investigating Loans – With grants and scholarships (“free money”) while it is the hope of every family to be able to cover the entire cost of education the adverse reality is that most families will have to borrow or use their assets to fund higher education.
- Perkins Loan – The Perkins Loan is the most reasonable federal loan as it has the lowest interest rate (5%) and fees. However, the Perkins Loan is only offered to families based on need.
- Stafford Loan – The Stafford Loan is also borrowed in the student’s name. A reliant undergraduate student can borrow $2,625 for the first year; as a sophomore $3500 and as a junior or senior $5,500.
- Plus Loan – The Parent Loan for Undergraduate Students (PLUS) is a loan for parents of dependent undergraduate students. It has a somewhat higher interest rate than the Stafford Loan, but is only limited in amount by the cost of education not already covered by other forms of aid.
Step 4: The Award Letter- School(s) to which the student has been accepted will issue their Award Letter(s) in the springtime. The Award Letter lists all the aid the student is entitled for and what the Expected Family Contribution (EFC) is to be.
Step 5: Applying for Loans- Applying for Loans for which the family is eligible is the final step in the financial aid process. In the award letter package, schools often send preprinted Perkins and Stafford Loan applications to the student, but ask the student to select a lender from a provided list.
Parent loans are the responsibility of the parent, not the student. There is a repayment term, which is up to 10 years. 60 days after the funds have been entirely disbursed repayment begins.
In order to help your child succeed in your life, you as a parent are responsible. Ensuring that your child is educated from the beginning is the best thing you can do.
Since teenagers need to learn how to handle their own finances, teenage finance is becoming an increasingly important subject. You cannot say that you want the best for your children, yet at the same time do nothing to support that statement.
Besides helping them by taking out a loan, you should also educate them the qualities of financial responsibility.
Give them all that you did not have by providing yourself and those with the knowledge you need to be successful as a family. Think of the future by making certain it in the present.