This is it! The day you have been waiting for. Your eighteen year old has graduated from high school and is headed to college. You couldn’t be more proud. Sure, you and your spouse have saved a few dollars here and there just for this occasion only to learn that what you had been holding on to isn’t nearly enough to even cover books.
Still excited and determined your child runs home with a FAFSA form. The Free Application for Federal Student Aid. This form, for some, can be the beginning of the end. Basically, after completing the application and submitting it back to your child’s school of choice your information is shopped around to different banks until funding is approved. Note! I said YOUR information.
What most parents don’t know or even expect is that they may have to co-sign or become the primary signer for their child’s student loan. Reason, the economy has changed and the days of bank lending money to persons with no or limited credit history is over.
So what’s the solution? That’s something that you have to decide. Are you and your spouse in a financial position where you can take on more debt? What are the long term effects that this can have on your credit? Is your credit even up to par to act as a co-signer on a student loan? What other loan or funding options are available for your child? These are all questions that you can consider. I know we love our children but going in to debt for them may not be the answer.
Until next week this is Your money, Your future, I am Carmen Johnson, your Financial Educator and the Founder and CEO of the Katie Able Foundation.
Please check us out at Katieablefoundation.org and remember, Do something to justify your Existence, TOGETHER we can create the future!