The cost of tuition can affect your college bound child from before they start college to long after graduation. Before your student even starts college, the cost of attendance can impact their choice of school. As a college student, they may have to juggle academics with a part-time job to help cover the funding gap. And your child could then be paying off their student loans long after graduation. Student loan borrowers can take as much 20 years or even longer after graduation to be completely free of student loan debt.
Any monetary help that you as parents can offer could enable your child pay off their student loan debt faster and become financial independent earlier. As parents, here are some thing you can do to help your child ease the burden of student loans.
8 Ways Parents Can Help With Student Loans
1. Cosign Private Student Loans
Private student loans are a popular solution for students looking to cover the funding gap. If your student does not meet the lender’s requirements, you can help by cosigning the loan. When you cosign a student loan, the lender determines approval and loan terms based on your financial credentials rather than your child’s. This can help your child get the funds they need.
2. Make Payments While in School
Most student loan payments don’t start until six months after graduation. However, interest starts accruing on most loans (except subsidized federal loans) from the time the money is disbursed. This can increase the loan balance considerably. Making small monthly principal payments while your student is still in college can help offset the interest that accrues. Even as little as $25 a month may help lower their debt by a few thousand dollars when it enters repayment.
3. Take A Parent Loan
Taking a parent loan to pay tuition costs can help reduce the amount your child has to borrow. There are several borrowing options available for parents. You can apply for a federal Parent PLUS Loan, which may allow you to borrow up to the total cost of tuition. You may also be able to take a private parent student loan, borrow from your 401 (k), or take a home equity loan. Do your research on the different options available to determine which one will have the least impact on your finances.
4. Match Your Child’s Payments
Making loan payments every month for several years is not easy, especially when someone is just starting out in their career. Matching your student’s monthly payments could give them some much-needed motivation to pay more than the minimum amount to help clear their debt faster. If you can’t afford to match the full monthly payments, commit to contributing only what you can. This will help your child feel like they are not alone in facing their student loan debt.
5. Give Cash Gifts To Be Used For Loan Payments
Cash gifts on birthdays and holidays (while maybe not as fun) could prove far more useful than buying your child the latest phone or booking tickets for a vacation. Using the additional funds toward loan payments could help your child pay off their loans faster and also reduce the interest that accrues. If family members or friends ask “what can I get Johnny for Christmas?” this cash contribution could be a great suggestion.
6. Help With Everyday Expenses
Not all parents have the financial resources to help their student pay off their student loans. Maybe you need to save for your other children’s college education, or you have ongoing medical expenses. Whatever the reason, if your child’s loan payments are too expensive, there are other ways you can help ease their financial burden. Offering rent-free accommodation, buying groceries occasionally, or helping cooking meals can be a huge help while your child is juggling loan payments and a new job.
7. Cosign A Refinancing Loan
Refinancing is one way to get a lower interest rate and manage monthly payments to better suit the borrower’s circumstances. If your student does not qualify for better terms when refinancing student loans, you can help by cosigning the refinanced loan. This can help them get a lower interest rate, saving thousands of dollars over the loan term.
8. Talk About Financial Responsibility
It’s never too early to talk to your child about financial responsibility. If you haven’t had this talk yet, the time to do it is now. Before a student heads off to college, it helps if they know the basics of banking, how credit cards work, the importance of building credit, and other everyday financial matters. This awareness makes all the difference in how your child handles their financial independence when they are away from home.
If you want to help with student loans but are not sure how to proceed, consider consulting a financial advisor. They will look into your savings and investments and advise you on the best options available to you. They will also help you understand the gift tax implications and how to avoid paying tax by limiting your annual contributions.
The key to better student loan management is choosing the right loans from reputable lenders. College Raptor’s Student Loan Finder tool makes it easy to find and compare loans and terms side-by-side with ease.
| Lender | Rates (APR) | Eligibility | |
|---|---|---|---|
 |
5.99%-16.59%* Variable
3.99%-15.59%* Fixed
|
Undergraduate and Graduate
|
VISIT CITIZENS |
 |
5.37% - 15.70% Variable
3.99% - 15.49% Fixed
|
Undergraduate and Graduate
|
VISIT SALLIE MAE |
 |
5.13% - 17.99% Variable
3.69% - 17.99% Fixed
|
Undergraduate and Graduate
|
VISIT CREDIBLE |
 |
6.00% - 13.75% Variable
3.99% - 13.75% Fixed
|
Undergraduate and Graduate
|
VISIT LENDKEY |
 |
6.01% - 15.47% Variable
3.69% - 14.71% Fixed
|
Undergraduate and Graduate
|
VISIT ASCENT |
 |
3.70% - 8.75% Fixed
|
Undergraduate and Graduate
|
VISIT ISL |
 |
5.62% - 16.85% Variable
3.74% - 16.49% Fixed
|
Undergraduate and Graduate
|
VISIT EARNEST |
 |
6.00% - 14.22% Variable
3.69% - 14.22% Fixed
|
Undergraduate and Graduate
|
VISIT ELFI |
