Paying for college tuition can be tough on anyone's budget. Tuition for
one year of undergraduate studies at Mississippi State costs $6,264. The
most expensive this year is USM at $6,336, which doesn't include room
and board, books or anything else.
To help students, many parents are co-signing school loans. But before you sign on the bottom line, there are some things experts say you need to think about.
College loan payments with added interest can be tough for a recent college grad to take on, and if a parent co-signs the loan they could end up taking on the responsibility.
Mark Kantrowitz with FinAid.org said, "Unemployment is high, average interest rate at graduation has increased. The amount of debt each year increases, making it much more difficult for students to be able to afford their student loans."
Believe it or not, two thirds of undergrads graduate with student loan debt. Right now, there is a total of $1 trillion in college loans. And for the first time ever, the student loan default rate now exceeds credit card delinquency rate.
Kantrowitz said most of the time if the loans are private, there is more than one signature on the bottom.
"More than 90 percent of new borrowers have a cosigner on their student loan. That's up from less than half before the credit crisis," Kantrowitz said.
If your child cannot make a payment, there are some options. Attorney Ann Margaret Carrozza said you can contact the lender and ask for an interest rate adjustment or a temporary reprieve from the payments where the interest does not accumulate.
If they will not give you either, ask for a forbearance, which will suspend payments with interest.
Any option, Carrozza said, is better than not paying the loan. That will not only be bad for your credit, but could put a lot of stress on a family.
"When a student defaults and a parent is called back from retirement to go back to work to make these payments, it's certainly not a good chapter in the parent/child relationship," Carrozza said.
Experts say families should make sure they have used up all the federal loans they can get before taking out a private student loan.
Another option could be to take out a home equity loan to help pay for college or to help pay a student loan off.
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