Here are some tips to help guide your student down the right path:
• Help your student understand the importance of borrowing responsibly. College is an investment but if loans are needed, they must be repaid – with interest.
• Complete the Free Application for Federal Student Aid (FAFSA)
• Even if you don’t think your family is eligible for financial aid, submit the form. The FAFSA helps determine whether students are eligible not only for grants, scholarships and work-study programs but also for federal loans.
• Take advantage of federal loans first. Compared to private student loans they usually have lower interest rates, more generous repayment terms and do not require credit history or a co-signer.
• If there is a funding gap after all other options (i.e., savings, federal loans, a part-time job or work-study and other gifts or available money) have been used, consider a private student loan.
Note: Supporting children through school is a wonderful gift, but if that gift may put your retirement at risk, talk with a financial professional first to see what options you may have.