Monday is National Decision Day, the last day for high school students to decide where they're heading off to college in the fall. Now the question for parents is how to pay for it.
“A lot of times we see parents doling out 40, 50, 60 thousand dollars a year which is, depending on their situation, might be appropriate but maybe for most it isn't,” FBB Capital Partners President Michael Mussio said.
If offered, consider having your children take advantage of the federal direct subsidized and unsubsidized loans, also known as Stafford loans. Usually, $5,500 is offered per year.
“A manageable number where they borrow in their own name, build credit history while they're in school, come out and choose a payment plan that works for them is totally reasonable,” Mussio said.
For subsidized loans, the U.S. Department of Education pays for the interest while the student is enrolled and for six months after graduation.
With unsubsidized loans, interest begins accruing on the loan immediately.
Parent PLUS loans are another option. They are not need based, but you must have good credit and borrowing is limited to the full cost of attendance minus any other loans or grants the student receives. These loans typically have a higher interest rate and strict repayment terms.
And remember, the federal aid awarded this year is just for one year. You must reapply every year.