How to Help Your Kids Pay for College

Paying for your child’s college education can be challenging because the cost of tuition has gone up significantly. While you should not sacrifice your financial stability to pay for your child’s college education, there are still some ways to help them out. By starting your planning early, you and your child will be better off. Still, even if you haven’t started saving since your kids were small, there are some ways to support them.

Consider Cosigning a Loan
If your student needs more assistance after getting federal loans, they might need a private student loan instead. Still, a student will need to have a good credit history to qualify, especially if they want to get a lower rate. To help them gain approval on a student loan, you might consider being a student loan cosigner. Of course, you are assuming liability for payments if your child becomes unable to pay back the funds. It is beneficial to your child, but it can be risky for you. Consider things carefully before making this decision and think about your child’s financial goals. Assess their financial responsibility before choosing to make the signature, and learn how you can be released from your obligation in the future if necessary.

Using a College Savings Plan
It is a good idea to create a college savings plan while your child is still young. Even if you don’t have a full eighteen years to save up, you can still get ahead of things with a 529 savings plan. All of the states and the District of Columbia have at least one kind of plan you can look into. Still, every state has different regulations around their plans, so it is best to do your research on yours to determine whether it would be helpful for you. You will want to find out how the savings add up over time as well. There are often high contribution levels, meaning you can often put away as much as you can afford. And there are often long-term options for investments, so your account might grow at a good rate as well. Share your plans with your child in advance of them entering college. Same as you would discuss nightlife dangers to avoid, and how to assimilate into dorm life, you should have open lines of communication about funding their tuition as well.

Using a Home Equity Loan
You can use your home’s value to help cover the cost of college, even though putting your home up could sound extreme to you. Still, it could be a good option if the interest rates are better than the current student loan rates. Know that it is not without its risks. Using this type of loan to minimize or prevent student debt does come with some risks. At some point, you could owe more on the home than it is worth. Plus, if you can’t make the repayments, you could lose the house. The federal government allows for a certain amount of student aid based on income and asset levels, and if you have too much access to cash, your student might not qualify for as much aid. And the funds you get from a home equity long could be taken into account during the financial review. Even if your child qualifies for some aid, it might not be as high as you need.