Cosigning a Student Loan
While you want to help alleviate your child’s debt burden and make it easier on them, you’ll want to set boundaries and be aware of how co-signing a student loan could affect your financial well-being. Parents need to understand that a cosigner is essentially a co-borrower, explains Levy. In turn, they’re on the hook to repay the debt. The cosigned loan will affect the parent’s credit history, too, he says.
So if your child is late with a student debt payment or defaults, it will ruin not just your child’s credit score, but yours as well. Even if the student manages the cosigned loan responsibly, making every payment on time, the loan can affect the parent’s ability to borrow, says Levy. For example, if the parent wants to get or refinance a mortgage, the cosigned loan will count as part of their indebtedness, potentially affecting approval for the mortgage or the interest rate they are charged.
Not Applying to Scholarships Early
As you might’ve guessed, scholarships are one of the most under-utilized tools for most students. The reasons are many, points out Farrington. Scholarships can be hard to find, take time to apply to, and the odds of winning could be slim.
But the beauty of scholarships is that they’re a form of gift aid-and the money is plentiful if students take the time to apply to as many as they can. Don’t forget to follow the instructions and provide all the required documents and information. You’d be surprised at how many people overlook that last step. Following the instructions can give you a big leg-up on the competition, says Farrington.
Along the same lines, some students don’t apply to enough scholarships. While there’s no magic number, Farrington suggests applying to at least 40 to 50 if possible. Some of these scholarships have an application fee, so do your research beforehand and create a scholarship fund if you can. The odds will be in your favor to pay for a good portion of your schooling if you follow this plan, says Farrington.
Not Planning to Work During School
One of the best things that college students can do, not only for their budgets but for their future careers, is work during school, says Farrington. Beyond the extra money, working provides students with real-world career skills-specifically business communication and business problem-solving skills. These can’t be taught in a classroom. By working during school, you can develop these skills, and improve your post-graduation job prospects.
There’s no shortage of ways to work while in college: work-study programs, paid internships, or on-campus jobs. Scour listings at college career centers, or a job fair. You can also bypass traditional, on-site jobs and look for freelance gigs on boards such as Upwork or Fiverr. While at first you might not be making a ton of money, freelancing can give you a wide range of experience. It could eventually be more lucrative than, say, working a job on campus.
Failing to File the FAFSA
The FAFSA (or Free Application for Federal Student Aid) is your key to not only qualifying for federal grants, work-study and scholarships, but is also your key to unlocking federal student loans, https://getbadcreditloan.com/payday-loans-ca/long-beach/ explains Farrington.
You should plan on filling out the FAFSA every year, as early as possible, says Farrington. The reason? Many school-based awards are limited, and they go to those who file early and qualify. So, even if you may qualify, if you don’t file early enough, you won’t get an award.
You’ll want to file the FAFSA as soon as possible, adds Levy. You can file as early as October 1, and the FAFSA has an 18-month cycle. That way you don’t miss the cutoff.