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Jul 27 2009 12:00AM


I'm afraid we will not qualify for financial aid because we make too much money. How can I find my daughter a loan for college without cosigning?


Funding a child's education can be a daunting task, said FPA member, Philip White, CFP®, of Ducere Capital. Other financial planners agree. "Financing college can be a difficult and challenging task," said FPA member, Terry Backmann, CFP®, of Jordan Financial Life Planning.

What's more, you are not alone in that regard, "A lot of people fall into that area where you describe yourself to be, ineligible for financial aid,yet facing huge costs."

Backmann and White offer the following suggestions:

  • Check with the school's financial aid office. "Even if she won't be eligible for need-based financial aid, they generally have information about funding alternatives," White said. "If she hasn't selected a school yet, consider contacting a college in your area and ask to talk with the financial aid staff there," Backmann said.  In addition, Backmann suggests telling the financial aid office "that money is an issue" and asking whether there any programs that may be of help, such as work-study, sports grants, and the like.
  • Check out the SallieMae program. "SallieMae will typically loan college money directly to the student," said Backmann. "However, as you've probably guessed, the student will pay a significantly higher interest rate without a cosigner."
  • Check with local lending institutions, including credit unions, to see if they offer student loans.
  • Consider family and/or friends. "Do you have a relative or friend willing to loan money to your daughter at a reasonable interest rate?" asked Backmann.
  • Use the Internet, but wisely. If you go loan shopping on the Internet, do so with your eyes wide open. "You want to be fully aware of the details of the loan, the payback, interest rate, and the like," said Backmann. Same goes for "college-funding experts," he said. For his part, White suggests that you visit Finaid.org. "That Web site is one of the most comprehensive sources for student financial aid on the Web," he said.
  • Consider school-for-work programs. "Is your daughter considering education as a career?" asked Backmann. There are considerations for students with education majors within the current FAFSA form that could help with some aid eligibility issues." Learn more about the Free Application for Federal Student Aid (FAFSA).
  • Consider splitting the costs. "Sit down with your daughter and agree to divide the cost between you taking out a Parent PLUS loan for a portion and she taking on a loan (not cosigned) for the rest, if you are willing to shoulder some of the cost," said Backmann. Learn more about Parent PLUS loans.
  • Cosign, but only if you must. "If you do decide to cosign, think about the consequences if you became responsible for the loan," said Backmann. "Is your daughter the type who would pay the loan or do you have concerns that she might let it go? Does she have life insurance coverage that would help you cover the cost in case she died?"

If you need help with planning and saving for college, consider hiring a financial planner. Check out additional FPA resources about planning and saving for college.

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