One of the toughest yet crucial decisions any parent or high school goer is forced to make is choosing the right college. Selecting the right course in the right college is easier said than done! Similarly, the process of funding higher education requires lots ofthinking and careful planning. When you are ought to fund your child’s education, you must take into consideration many factors. Based on your financial status, you must decide if it’s going to be a 2-year or 4-year program, a private or public school, or whether they are going to study in-town or somewhere else. The biggest puzzle and most expensive decision to be made would be on how to pay for college education without any problems.
As parents, you can choose four different types of financial solutions for your child. This includes the PLUS Loans, Parent Federal Direct Loans, Parent Loans and 529 Plan.
Help #1 – PLUS Loan
PLUS Loan is a special kind of federal loan for parents with dependent undergrad children. The loan will help you cover many educational expenses. According to the Department of Education, you can apply for PLUS loans through the participating college. In case of this loan, the US Department of Education acts as the financing institution. And, the borrower should not have a very bad credit background. For the academic year 2013 to 2014, Parent PLUS Loan was offered at an interest of 7.21%. However, the interest rate is not fixed. According to reliable sources, the final rate of interest is based on the 10-year Treasury Note. Sometimes, the value could reach a paramount figure of 10.5%. The total amount granted during a Parent PLUS Loan is the net difference between the tuition fee and all other possible aids acquired by the student.
Help #2 – Parent Federal Direct Loan
Parent Federal Direct Loan is for older parents, who wish to be a part of the student’s debt. Though the US Department of Education advises parents to make use of the Parent PLUS Loan, most parents admire the Parent Federal Direct Loan for its flexible and affordable nature. The loan is granted based on the borrower’s income and reimbursement capability. If you have a very good financial background, you will qualify for this loan. On the other hand, parents who retire unexpectedly should be prepared to face bankruptcy due to the Federal Direct Loan.
Help #3 – Private Loans
It is quite interesting to note that parents can opt for Private loans from various banks and financial institutions. Private Loans have variable and diverse rates of interest. In general, the loans would start at 3% and hit a maximum figure of 12%. This should be your only option when you don’t have any other alternate sources of funding.
Help #4 – 529 Plan
Finally, parents can make use of the 529 Plan. This is a special, well-composed tax advantage plan formulated to help parents, who wish to save for their child’s future. Officially, the 529 Plan is also known as a Qualified Tuition Plan. It is sponsored by various organizations, educational bodies and state agencies.