While borrowing money seems like the go-to option to help pay for college, parents should weigh this option carefully, Miller said.
If it comes down to your child taking out a loan, or you co-signing for it, make sure you know the different types of loans and interest rates available so you can lessen the burden of student debt after graduation. (Federal aid, including Pell Grants and federal student loans, may have lower rates and better borrower protections than private loans.)
Parents with good credit and income may want to consider a federal parent PLUS loan or a private parent loan of their own, said Joe DePaulo, CEO and co-founder of College Ave Student Loans. Just don’t sacrifice retirement savings to pay for college, he said. Unlike college, there are no scholarships or unsecured loans designed to cover those golden years.
“A good rule of thumb is to make sure you’re not paying more for your child’s education per month than you are saving for retirement,” he said.