Let’s be honest in that college is always going to have a steep price tag. As a parent, you’re already aware of how much of an investment college is, but your child, on the other hand, might not. Every parent wants their little one to be happy and successful in their life and that all starts with them going to college.
Your child might have already decided which of the many jobs in business they want and decided to pursue a degree in business. However, business degrees can be pretty expensive depending on the route they take. But that doesn’t mean they should struggle to cover the costs; you can become a co-signer on their student loan to help them.
In this post, we’ll be going over how parents can be co-signers for their child’s business degrees.
What is a Co-Signer?
A co-signer is someone who is on the hook to pay back a debt should the primary signer prove unable to do so. In other words, you’ll be legally responsible for your child’s student loans if they don’t pay them. As much as you want to help your child, becoming a co-signer is a big responsibility and requires a great deal of trust.
In fact, this will impact both their credit score and yours. If something goes wrong, you’ll be affected as well. You’ll really need to sit down and think about it before coming to a final decision.
Have a Savings Account in Place
Parents who are hoping to help their children attend college can do so at any given time. One of the best pieces of money advice you should not ignore and ways to build a little bit of security before that day comes is to open a savings account.
There are two types of these accounts you can open: a regular bank savings account or a 529 account. A regular savings account lets you deposit funds, which builds up interest over time. This interest basically increases how much is in the account. You also have nothing to worry about in terms of security as the FDIC or NCUA insure it themselves. A 529 college account functions a little differently.
If anything, this type of savings account works similarly to a retirement account. However, you can only use it for educational purposes. On the flip side, this account can yield considerable tax benefits. Each state handles this account differently, so be sure to review the guidelines before opening this.
Assist Your Child with Their FAFSA
FAFSA stands for free application for federal student aid. Being a first-time college student, your child may not know how to proceed. You can assist them by going over what they need to know, like the COA, EFC, and how long they have to wait to receive their loan.
Be Aware of the Consequences
Being a co-signer for your child’s degree requires a lot of forethought. You might even be tempted to borrow from your 401k or retirement fund. If you do go this route, be aware that you could be subject to tax penalties as a result. Early withdrawals also come with a considerable fee, so be sure to think twice before making the final call.