SLS037: What’s the Best Way for Parents to Help Their Children Pay for College?

Federal Stafford Loans have a cumulative loan limit of $31,000 for dependent undergraduate students, and $57,500 independent undergraduate students.

The average cost of tuition and fees for the 2015–2016 school year coming in at $32,405 at private colleges, $9,410 for state residents at public colleges, and for out-of-state residents attending public universities. That doesn’t include books, food, living expenses and other costs associated with going to college.

Federal student loans don’t cover the cost of higher education for most students.

Should a parent contribute to the cost of their child’s college education? And if so, what’s the best way to make that contribution?

On today’s show we review the pros and cons of each of the major ways in which a parent can contribute to the cost of a child’s college education. Listen to learn about:

1. The best way to use your savings on the costs of college;
2. The difference between borrowing against a 401(k) and taking a withdrawal;
3. The dangers of getting a home equity loan or cash-out refinance of your home’s equity;
4. How Federal Direct PLUS Loans for Parents work; and
5. Cosigning and guaranteeing your child’s private student loans.

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