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Take out a PLUS or private loan
While it's hard to beat the interest rates offered by federal student loans it is possible to get one from a private lender at a favorable interest rate and with no fees to help out with those college expenses. If you’re not familiar with PLUS loans these are loans given to the parents of dependent undergraduate students. The lender is the US Department of Education and the maximum amount of these loans is the cost of attending the school (as determined by the school) less any other financial aid your child has received. The interest rate on these loans on or after October 1, 2015 is 4.272%. Since you, the parent, is the borrower you will be expected to begin repaying the PLUS loan once the money has been dispersed. However, you can ask for a deferment while your son or daughter is enrolled in school at least half-time and for an extra six months after she or he graduates. Of course, you will not be required to make any payments if you get the loan deferred. However, be aware that it will continue to accrue interest.
The PLUS program for parents may not offer the best interest rate but it does have its advantages. One of the most important of which is that it offers the deferment option as well as flexible repayment terms.
Use your 401(k) to offset some of those college expenses
Does your 401(k) allow you to take out a loan? In general, borrowing money from your 401(k) is not a really good idea. However, it can be a viable option so long as you are convinced you can repay the loan. The law allows you to borrow as much as 50% of your current balance up to a maximum of $50,000 and you will probably have five years to pay back the money. The biggest benefit of this is that instead of paying interest to a bank or the federal government, you’re repaying yourself and with no interest charges. Be aware that there is a downside to this, which is that if you change employers or lose your job you will likely be required to repay the loan immediately. And if you can't repay the money, you may be subject to a penalty for early withdrawal that could seriously eat into your retirement account.
File an appeal
You may not have thought of this but you can always appeal whatever financial aid package your child was offered. Of course, you can't get more aid just by asking nicely. To be successful in appealing that aid package your family needs to have experienced a change in its finances since you originally applied for aid. This could be a job loss, a death in the family, a cut in pay, a disability, a divorce or because you were hit with a huge unanticipated expense such as a big medical bill.
When you talk to the school's financial aid officer the experts say you need to be very specific about what you're requesting and you will need to provide documentation to support the recent change in your finances. This could be your termination letter, a copy of that big medical bill, your divorce decree or pay stubs proving that you had been hit with a big cut in pay.
Last but not least, remember that your child is probably pulling down money from a summer job and some of it could be used for lab fees, books and other items you will find on the school’s bill. After all, it's their education and their future so there's absolutely nothing wrong with her or him chipping in as well. They may whine a bit about this but it's really in their best interest over the long term.