Parents on the hook… Student Loans
Over the last 10 years, the average cost of attendance for America’s universities has risen over 80%. What does that mean for the families that are trying to send their children to college? Most parents want their kids to go to college but don’t know how they are going to pay for it.
Illinois’ premier state school, The University of Illinois, has a cost of attendance of just over $29,000. That means to send your child there for four years would cost the family a little over $116,000.
For most families, borrowing money will be fact of life when it comes to paying for school. Where do you borrow from is the question. The Stafford Loan is a loan the student signs for and the student has the debt in their name. The maximum the Stafford loan will pay for 4 years is $27,000.
Another loan source which most colleges encourage is the PLUS Loan. This is a loan the parent is responsible for. For this loan they will give you up to the total cost of attendance less any aid received. Using the University of Illinois as an example (assuming the only aid the student got was the Stafford Loan) the parents would be eligible for an $89,000 PLUS Loan(Cost of Attendance $116,000 – Stafford Loan $27,000 = $89,000).
You may have an agreement with your child that they will pay for this loan, but… What happens if they don’t or can’t pay for the loan?
The following article from the Wall Street Journal is very informative in talking about the risks of parents signing for loans for their kid’s educations.