Student loan debt is reaching across the generations.
According to the results of an IonTuition survey released in February 2018, 51% of Generation Z students expect their parents’ student loan debt will negatively impact their ability to pay for their education. And 20% of the students surveyed — between the ages of 18 and 23, according to the company — say their parents are paying back their own college loans still and likely won’t be willing to take out more debt to support their children.
Generation X students are heading to college more prepared financially than those from previous generations — 13% of those surveyed said they had saved more than $20,000 before they got to campus. But they still are stressed about how they can afford higher education, especially if their parents can’t help.
Your parents’ student loan debt might make it difficult for you to cover all the costs of a degree, but there are five ways you can find the money you need.
How your parents’ student loan debt might impact you
If your parents still are making monthly payments on their own student loan debt, they’ll have less money to save for your education.
When the government determines your Expected Family Contribution (EFC) — that is, how much money your family is expected to contribute toward your education — it usually doesn’t incorporate credit card debt or student loans into the calculation. This could inflate your EFC, making your family responsible for contributing money that is actually going toward the debt your parents have.
You can appeal your financial aid offer if you think you deserve more federal help, but it’s not easy.
Also, if your parents have mishandled their current debt they could be ineligible for federal Parent PLUS Loans, which your family could take out for your education. Parent PLUS Loans are available to parents of dependent undergraduate students, but to qualify, your parents can’t have an adverse credit history recently.
If your parents had a loan written off in the last five years, had their wages garnished, or are 90 days or more delinquent on their current debt, for example, they are likely to be ineligible for a Parent PLUS Loan.
In some cases, parents do take out Parent PLUS Loans while still paying their own student debt. A Discover Student Loans survey found that 43% of parents have more than $30,000 in combined student debt, including their own loans and debt they’ve taken on behalf of their children.
If your parents can’t pay for your education, you’ll have fill in the gaps. It might seem impossible, but with the right planning, you can find ways to pay for school.
You still have options
If your parents don’t have the money to help with your college education, you can finance it in other ways. Here are five steps you could take.
1. Ask your parents to apply for a Parent PLUS loan
Even if your parents have an adverse credit history, asking them to apply for a Parent PLUS Loan could still be useful.
If their application is denied, they can try again with a cosigner. If a cosigner isn’t an option or if the application is denied again, then you might become eligible to borrow more federal student loans on your own. Instead of facing the lower borrowing limits of a dependent student, you could be eligible for the higher limits available to independent students.
That means you’ll be able to borrow more from the government, which offers low interest rates and good borrower protections, rather than from a private lender.
2. Apply for private student loans
Federal student loans are preferred because they offer low interest rates, but private student loan lenders also can help you cover the gap in the college costs.
However, most private lenders require you to have a strong income and credit score. If you don’t meet their requirements, you might need to find a cosigner before you’re approved.
Still, applying for a private loan might be worth a shot, especially if your credit score is above 650. Lenders such as Citizens Bank and LendKey don’t charge application fees, so it won’t cost you money to apply.
3. Search for different kinds of scholarships
Your grades, athletic achievements, community involvement, or even the color of your hair could help you win free money to pay for college. So you might want to apply for scholarships even if you don’t think you’ll win them.
There are many niche scholarships that don’t receive a lot of applications. Start your scholarship search early so you have the time to apply for as many as possible.
4. Find a remote job
More and more students are working while they’re in school. This can be easy if you can find a flexible or remote job that works around your school schedule.
It might be too difficult to manage full-time work and school, so you could either work part-time or attend school part-time to be able to balance your course load with work.
5. Get help from your employer
If you’ve been in the workforce for a while, your employer might agree to cover some of the costs associated with your education.
In some cases, your parents might be dependent on you
In addition to paying your own way through college, you might also have to help your parents with bills at home. But don’t let this discourage you from chasing your dreams and attending post-secondary school.
Consider ways to share expenses with your parents while attending college.
For example, can you pick a college close to home? Not only will you be able to help with the rent if you have a job, but you can use your local student discounts at participating merchants to lower household expenses.
Finding the money for college isn’t easy, but it’s possible with the right planning and persistence.
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|* The Sallie Mae partner referenced is not the creditor for these loans and is compensated by Sallie Mae for the referral of Smart Option Student Loan customers.
1 Important Disclosures for College Ave.
College Ave Student Loans products are made available through either Firstrust Bank, member FDIC or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.
(1)All rates shown include the auto-pay discount. The 0.25% auto-pay interest rate reduction applies as long as a valid bank account is designated for required monthly payments. Variable rates may increase after consummation.
(2)This informational repayment example uses typical loan terms for a freshman borrower who selects the Deferred Repayment Option with a 10-year repayment term, has a $10,000 loan that is disbursed in one disbursement and a 8.35% fixed Annual Percentage Rate (“APR”): 120 monthly payments of $179.18 while in the repayment period, for a total amount of payments of $21,501.54. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary.
(3)As certified by your school and less any other financial aid you might receive. Minimum $1,000.
Information advertised valid as of 11/4/2019. Variable interest rates may increase after consummation.
2 Sallie Mae Disclaimer: Click here for important information. Terms, conditions and limitations apply.
3 Important Disclosures for Discover.
Discover's lowest rates shown are for the undergraduate loan and include an interest-only repayment discount and a 0.25% interest rate reduction while enrolled in automatic payments.
4 Important Disclosures for CommonBond.
Offered terms are subject to change and state law restrictions. Loans are offered through CommonBond Lending, LLC (NMLS #1175900).
5 Important Disclosures for Citizens.
Undergraduate Rate Disclosure: Variable rate, based on the one-month London Interbank Offered Rate (“LIBOR”) published in The Wall Street Journal on the twenty-fifth day, or the next business day, of the preceding calendar month. As of December 1, 2019, the one-month LIBOR rate is 1.70%. Variable interest rates range from 2.80% – 11.06% (2.80% – 10.91% APR) and will fluctuate over the term of the loan with changes in the LIBOR rate, and will vary based on applicable terms, level of degree earned and presence of a co-signer. Fixed interest rates range from 4.72% – 12.19% (4.72% – 12.04% APR) based on applicable terms, level of degree earned and presence of a co-signer. Lowest rates shown requires application with a co-signer, are for eligible applicants, require a 5-year repayment term, borrower making scheduled payments while in school and include our Loyalty and Automatic Payment discounts of 0.25 percentage points each, as outlined in the Loyalty Discount and Automatic Payment Discount disclosures. Subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change. Please note: Due to federal regulations, Citizens Bank is required to provide every potential borrower with disclosure information before they apply for a private student loan. The borrower will be presented with an Application Disclosure and an Approval Disclosure within the application process before they accept the terms and conditions of the loan.
Please Note: International Students are not eligible for the multi-year approval feature.
|2.84% – 10.97%1||Undergraduate, Graduate, and Parents|
|2.87% – 10.75%*,2||Undergraduate and Graduate|
|2.80% – 11.37%3||Undergraduate and Graduate|
|3.52% – 9.50%4||Undergraduate and Graduate|
|2.80% – 11.06%5||Undergraduate and Graduate|