7 in 10 parents spent more than expected on tuition and tuition fees, survey finds
It is well known that a college education can come at an incredibly high price. Yet the vast majority (70%) of parents of students spent more on tuition and fees than they expected, according to a new report. survey conducted by College Ave Student Loans.
Two-thirds (66%) of parents of students said figuring out how to pay for college was the most stressful part of the college planning process, but it didn’t have to be. With a little research and the right financial products, paying for college expenses can be easier than you think.
Read on to learn more about how to finance your child’s college expenses, and visit Credible when you’re ready to see the estimated interest rates on your private student loan.
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3 Ways High School Students & Parents Can Prepare For Tuition
Almost 80% of parents have put money aside to help pay for their child’s college expenses, but only 64% feel comfortable with the amount they have saved so far. Just over a quarter of parents have saved enough to pay for their child’s full education, while the rest will have to rely on other forms of financial assistance such as loans and grants to fund university expenses.
Here are some steps high school students and their parents can do now to prepare for school fees:
- Estimate your university expenses. Tuition and university fees are only a part of the total cost of attendance. You will need to consider paying for room and board as well as meal plans, groceries, toiletries, and other living expenses.
- Fill in the FAFSA Form. The registration period for the Free Application for Federal Student Aid (FAFSA) for the 2022-2023 academic year is now open. This helps you determine your eligibility for federal student loans, scholarships, and work-study programs.
- Research all of your borrowing options. Federal direct loans have borrowing limits, depending on whether the student is self-employed or dependent. Parents may consider borrowing Federal Direct PLUS loans or private loans to fill the funding gap when federal student assistance is insufficient.
If you decide to take out private student loans to help pay for your education, be sure to compare repayment options between multiple banks and lenders before borrowing. You can check your student loan rate without impacting your credit score on Credible. Then use a student loan calculator to estimate your monthly payments to see if private parental loans are right for you.
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Parent PLUS loans vs. private student loans
Parents of students commonly use Federal Direct PLUS loans or private student loans to fill the funding gap if federal student loans are insufficient to cover tuition costs. Here is what you need to know about these types of loans:
- PLUS loans are issued by the federal government and have fixed interest rates that depend on the year in which they were borrowed. For the academic year 2021-22, the interest rate on a PLUS parent loan is 6.28% plus a one-time loan fee of 4.288%.
- Private student loans are issued by banks, online lenders, and credit unions instead of the government. Interest rates vary depending on the length and amount of the loan, as well as the creditworthiness of the borrower. Creditworthy borrowers can benefit from lower rates on a private student loan than those offered by PLUS parent loans.
- Since PLUS loans are federal loans, they are eligible for certain borrower protections such as administrative forbearance, income-oriented repayment plans, and student loan forgiveness programs such as loan forgiveness. civil service (PSLF). In contrast, private student loans are not eligible for federal protections.
If you are deciding what type of loan to borrow to help pay for your child’s education, check your estimated repayment terms first. You can compare the student loan rates of parents from several private lenders on Credible with a gentle credit check, so you can choose the borrowing option with the lowest interest rate.
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