Loans for College Tuition: A Parent's Obligation?

Hey guys, just musing over something. How many parents do you think actually take out loans to fund their child's college tuition? Is this a common practice or do families typically seek out other options? Any insights would be greatly appreciated.

Hi there! That's a great question and it really depends on individual family situations. Many parents do take out loans to cover their child's education, especially for more expensive schools. These are typically federal Parent PLUS loans or private loans. Parent PLUS loans are widely used - in fact, federal data shows that nearly 3.6 million Parent PLUS borrowers owed nearly $101 billion as of 2019. However, these loans come with higher interest rates compared to undergraduate loans and there's a fee being deducted from each disbursement.

That being said, a lot of parents also explore other options firstly, such as personal savings, scholarships, grants, or work-study arrangements. It's also not uncommon for students to take out loans under their own name with a parent acting as a co-signer. It essentially boils down to carefully weighing the pros and cons of each method and making the best financial decision for the family.

Remember that while it's admirable for parents to shoulder the responsibility of their child's college tuition, it's also important to balance this with other financial obligations such as retirement savings. It can be helpful to consult with a financial advisor to plan accordingly. It's always a good idea to utilize college's net price calculators to have a clear understanding of the potential cost beforehand.

Affordability is a key factor in college selection and financial planning is a crucial part of this process. Hope this information gives you some perspective!