Are you planning on taking out student loans for your children or co-signing for them? Think twice about doing this. Student loans are not dischargeable in bankruptcy and are almost impossible to get out of. The government can even take part of your Social Security payments to pay for federal student loan debts.
First, it is best to get federal student loans and avoid private ones. Federal student loans have affordable repayment programs to which every borrower is entitled so long as they are current on their loan payments; private student loans have no such programs. The types of student loans listed below are all federal loans.
Every college student is eligible for a Stafford loan. That should be the first loan taken if your child needs a student loan. There are also PLUS and Perkins loans that your children may be able to get if the Stafford loan is not enough. The last resort would be for you to get a Parent PLUS loan, but you should avoid that if at all possible. Your money needs to be used for saving for your retirement, not spent repaying your children’s student loans.
Some parents willingly co-sign for their children’s student loans. Don’t do this unless it’s required to get the loan and the loan is badly needed. By co-signing for a loan, you make yourself just as liable as the signer for the loan. If your children don’t pay the student loan, the lender and/or the government will come after you for the payments. Co-signing for your children’s student loans does not benefit your children in any way unless they can’t get the loan without you co-signing.
If you have student loans you can’t pay, contact a student loan attorney today. If you get behind on federal loans, an student loan attorney can get fix this problem and get you the affordable payments that you need.