Education Borrowing

GROWTH IN STUDENT loans has been a big source of worry in recent decades, and it seems many graduates struggle to repay the money they borrowed. Still, research suggests that those who struggle the most often either borrowed to attend a community or for-profit college, or they failed to graduate.

Can’t afford to help your children with college costs? Consider counseling them to avoid costly colleges that will leave them heavily in debt, especially if their planned career will pay a modest income. You might also suggest strategies that can hold down college costs, such as attending a community college for the first two years and then transferring to a more prestigious school, from which they would then graduate.

Alternatively, you might suggest attending a nearby college and saving money by living at home initially. Food and housing are a major college cost, typically accounting for roughly half the total cost for in-state students at public universities.

While education loans are available from some banks, students should probably focus on federal loans, which account for the vast majority of education loans. Parents might also consider the federal loan program for parents, as well as a home equity line of credit and possibly a 401(k) loan.

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