Review your finances to make a detailed list of your annual income, monthly expenses, savings accounts, and personal financial goals. This will give you a blue print of where you stand financially to understand how much you can personally contribute to your child’s education.
Research schools that may not be your child’s first choice as their dream school may not be financially feasible. The same professors at their dream school are teaching at lower priced schools. Remember, your child can get a quality education anywhere it is about what they make it.
The Free Application for Federal Student Aid (FAFSA) is the first step in securing a post-secondary education. It is critical that you and your family complete the FAFSA to review your eligibility to see where you stand financially and which options are most affordable.
Upon completion of the FAFSA, Parents/Guardians are offered Parent PLUS Loans from the Federal Direct Loan Program to cover any outstanding educational expenses. However, if you apply, endorse, or co-sign a Parent PLUS loan you should know they have long term financial consequences. Therefore, if you are considering a PLUS loan, be sure that your child has exhausted all of their options before applying. Please note the current interest rate of a Parent PLUS Loan disbursed on or after July 1, 2017 is 7%.
Please be aware that if YOU apply for the Parent PLUS loan, then YOU are responsible for repaying PLUS Loans and not your child. If you are planning to endorse or co-sign a loan, please understand all of the terms and conditions before co-signing. Endorsing and/or co-signing can have bad effects on your credit if the person fails to repay! According to the Department of Education, too many families have been borrowing PLUS loans or co-signing loans that they cannot repay. Therefore, please review your finances, loan types, and repayment options to determine if this is an option you can afford.
If your child is offered several financial aid packages, review all aid, terms & conditions, and out of pocket expenses to see which institution is more financially feasible for your family.
It is true that not all financial aid packages will be to your liking and/or reflect your family's economic status. Therefore, follow-up with the financial aid office to negotiate the award package. Schools understand that a parents' financial situation may change at any time. However, it is important to note that you cannot depend on an institution to cover your child's expenses.