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Student Loans

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Student loans are available to both parents and students. The qualifications vary depending on who is borrowing the money. There are federal and private loans available, depending on income, assets, and credit rating. Home equity loans and consolidation loans are also used to help pay for college.

Federal loans are the most well-known and often have the best interest rates and repayment terms. Your child’s high school guidance counselor or college financial aid office can provide a wealth of information about student loans.

If parents have a good relationship with their lending institution, there may be private loans available to them. However, since interest rates on these loans are usually higher than federal student loans, they are most often used to make up the difference in all other forms of payment and the remaining balance that is due.

Home equity loans are an affordable option for helping your student pay for college, but the risk is much higher with a loan that is attached to your home. If, for some reason, you are unable to repay the loan, you risk losing your house and all the equity you’ve built up over the years. For this reason, home equity loans should only be considered as a secondary option for paying for college tuition. Borrowing against your retirement plan can be as risky as a home equity loan. This type of loan should only be considered as a secondary option as well.

Borrowing against CD’s can be a good option and these types of loans often have lower interest rates than standard, unsecured loans.

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