More parents are taking out student loans to finance their children’s education. However, financial experts have stated that this is a bad idea. Parents who decide to pay for their children’s education could end up spending thousands of dollars per year.
There are several ways that parents can take out a student loan. Many of them opt to get a Parent Plus loan. One of the many problems with this type of loan is that people are allowed to take out much more than they can afford. In fact, they can borrow up to the amount of the tuition.
Other parents decide to be a co-signer on a loan. If a person signs on to be a co-signer, then they will be 100 percent responsible for the loan in the event that the borrower defaults. Additionally, some parents will take out a home equity loan. This can be risky because it can cause one to lose their home if the loan is not paid back.
Parent Plus loans have a number of downfalls. They are fairly easy to get. A simple credit check will get you approved. No underwriting is required. However, it is hard to get these student loans forgiven.
There are much better options for paying for education. Your student can pay for their education with grants and scholarships. One of the many great things about grants and scholarships is that they do not have to be paid back. Students can also work to pay their way through college.
Furthermore, if scholarships and grants are not enough to cover the education, then the student should be the one who is responsible for borrowing the money. Parents who take out student loans could be putting their own financial future at risk. It will be a lot harder for you to retire if you have to pay student loans.