Taking a Loan to Pay for Kids’ College? Read This First

Taking a Loan to Pay for Kids’ College? Read This First

Data shows that more parents are taking out loans for college funding. We take a look at the pros and cons of different funding sources.

New data shows that student loan growth has slowed in the past several years. And although that sounds good, there’s more to the story.

Student loan balances have hit a plateau in recent years, but it isn’t because college costs are dropping or fewer students are going to college. Rather, it’s because parents are increasingly taking on student debt themselves, says Mark Kantrowitz, publisher and vice president of research at Savingforcollege.

Taking a Loan to Pay for Kids’ College? Read This First

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But it’s not necessarily because parents want to shelter their kids from taking on loans. In many cases, it’s because student loans won’t cover the full cost of college. Federal student loan maximums haven’t been updated for a decade and therefore have not kept pace with increasing college costs. Dependent students cannot have more than $31,000 in federal loans in total, and no more than $23,000 of this can be in subsidized loans. Read more