Taking out a student loan to cover college?

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For parents, sending kids off to college is a point of pride coupled with the echoes of an empty nest. In other words, it’s a time of mixed emotions.

And while this milestone moment is an undeniable accomplishment on both your parts, for those who plan to help out financially, it can also be stressful.

That’s why it helps to turn to the experts when it comes to figuring out how to pay for this exciting (and expensive) life stage. The above video shares advice from financial pro Winnie Sun for navigating this era as a family. Check it out to hear five of her insider tips, broken down into actionable, manageable steps — and read on for a recap below.

The majority of parents help pay for their kids’ higher education. According to a recent survey from College Ave Student Loans, 79% of parents of college-aged students have some savings set aside for college but fewer than 1 in 5 (17%) have saved enough to cover the full cost of higher education.

It’s understandable that most families don’t have the money to pay the full cost of college on hand, given that the average cost of tuition and fees at a public, four-year institution is more than $10,700 for in-state schools and more than $27,500 for out-of-state universities. Private school comes with an even heftier price tag of more than $38,000 per year.

The good news is, according to a survey from College Ave Student Loans released in January, a majority of parents (71%) feel confident in their plans to pay for the education of their college-bound students. And with a variety of financing options available — scholarships and grants, 529 savings plans, parents’ savings or income, and federal or private student loans — it’s easy to see why confidence is high.

One thing to avoid, however, is letting paying for kids’ college come at the cost of parents’ other financial goals like saving for retirement. More than half (56%) of parents surveyed said that they would defer their retirement to pay for their child’s college tuition, and 20% say they’ve already dipped into their retirement savings to cover college expenses. This can have serious consequences including early withdrawal fees and excessive tax obligations. There are long-term repercussions for your family, too — without robust retirement savings, you’re setting yourself up for difficulties down the line, explained Sun.

She suggested that parents should be careful when it comes to having a “savior complex” mindset. Sun isn’t alone in this sentiment: More than a third (37%) of survey respondents said that they would advise the parents of incoming college freshmen to not sacrifice their retirement to fund a child’s college education.

Even for parents who feel prepared, there’s always the matter of hidden costs. Sun explained that it’s important to build extra room into a budget for things like housing, food, extracurricular activities, textbooks, and other miscellaneous expenses — like visits home for the holidays.

If you do plan to help your kids pay for their education, explore the various options available for financial aid. The first step to unlocking financial aid is by filling out the Free Application for Federal Student Aid (FAFSA).

Make a plan as a family. For many people, college is one of the biggest investments they’ll ever make. No matter how a parent plans to support their child’s higher education, these are big, life-altering decisions. That’s why it’s important to have a strategy in place — along with having serious, family-wide discussions about the financials. Without it, students might have ambiguous expectations. Be open and honest with your children from an early age — when they’re in high school or even before.

Frank conversations with your kids can help you decide important things, such as the percentage of tuition you plan to cover versus the costs they’ll be responsible for on their own. Sun suggested going over the options for your children to contribute to their own education, like work-study programs, part-time jobs or summer employment. In those early discussions, you might also encourage your kids to apply to scholarship programs.

College Ave Student Loans is another helpful resource for parents when figuring out their family’s unique roadmap to paying for college. College Ave offers private student loans, planning tools and calculators to help parents figure out the best way to help support their child’s major milestone. College Ave’s intuitive platform makes applying simple, and with great rates and flexible repayment options you can create a student loan that fits your family’s budget.

No matter how your family plans to pay for college, it helps to hear from those who know the ins and outs of the financial ecosystem involved. Check out the full video above to hear Sun’s five most important pieces of advice.

Learn more about College Ave Student Loans and their resources and offerings by visiting them online.

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