Borrowing: The Parent’s Role – BigFuture (2024)

FAQs

Borrowing: The Parent’s Role – BigFuture? ›

Get Your Parents Involved

You still must answer the questions about them if you're considered a dependent student. What if my parents aren't going to help me pay for college and refuse to provide information for my FAFSA® form? You can't be considered independent of your parents just because they refuse to help you with this process.

Key Points. Borrowing from parents can offer a low-cost way to meet financial obligations. Talk about terms and sign a promissory note to avoid misunderstandings. Loaning to relatives shouldn't come with a guilt trip.

There's a general rule that you shouldn't borrow more in student loans than you expect to make in your first year out of college. A bachelor's degree recipient's average student loan debt in 2021 was $29,100. In theory, a graduate with a salary above this could handle a 10-year standard repayment plan.

During the 2021/2022 school year, the average parent covered about 43% of their student's college costs using income and savings. Parents covered an additional 8% of that cost by taking out loans, according to the Sallie Mae study. The average total parent contribution came out to $13,000 per year.

Skip Questions About Parents' Assets (2023–24)

If you decide to skip these questions, doing so won't affect your eligibility for federal student aid. Select “Yes” to skip questions about your parents' assets. Select “No” to answer questions about your parents' assets.

Declare Yourself Independent for Financial Aid. A student age 24 or older by Dec. 31 of the award year is considered independent for federal financial aid purposes.

Expenses like textbooks, groceries, or membership to a campus organization that will benefit your education are good reasons to ask for financial help. If your budget includes money for hobbies and entertainment, don't ask for more cash to buy a concert ticket or the newest smartphone.

There is no universally correct age that parents should stop supporting their children once they reach adulthood, as each family will need to make the determination based on what is best for their wallets and to best support their values.

If your parents' money isn't considered a part of your budgeting plan, then there's no need to ask for it. Your budget will also account for an emergency fund, so don't worry about slip-ups there.

Is $20,000 in student loans a lot? ›

The average outstanding federal student loan debt per borrower is $37,853. 52.6% of indebted borrowers owe $20,000 or less in federal student loans. 32.1% of indebted student borrowers owe $10,000 or less in federal student loans. 15.0% of borrowers owe less than $5,000.

The 20/10 rule follows the logic that no more than 20% of your annual net income should be spent on consumer debt and no more than 10% of your monthly net income should be used to pay debt repayments.

Another common guideline is to borrow no more than your first year's salary. However, it's easy to over-project your earnings, Garcia says, and borrowing more than the federal student limit involves your family co-signing private student loans or taking Parent PLUS loans to help.

About 85%. Most parents do at least assist their children, but they may not pay full price. Most colleges and universities offer some sort of financial aid, based on family income, and some are extremely generous. Only a few private colleges offer merit scholarships, but a number of good state universities do.

So, should parents pay for college? The answer isn't necessarily “yes” or “no” –– it could be somewhere in the middle. You may not feel like you should be expected to cover all the expenses associated with your kid's college, but the hard truth is that college tuition costs much more today than it used to.

The average family uses a few – or all – of the following to pay for college: Scholarships and Grants – Free money that does not have to be paid back. Financial Aid – Distributed by the government and/or colleges and comes in the form of grants, work study, or student loans.

You may not be required to provide parental information on your Free Application for Federal Student Aid (FAFSA) form. If you answer NO to ALL of these questions, then you may be considered a dependent student and may be required to provide your parents' financial information when completing the FAFSA form.

As a dependent student, you're assumed to have parental support, so your parents' information has to be assessed along with yours to get a full picture of your family's financial strength and calculate your federal student aid eligibility.

Although your FAFSA form will be submitted, it won't be fully processed. You won't receive an Expected Family Contribution (EFC) and must immediately contact the financial aid office at the college or career school you plan to attend.

Note: Law school and health profession students may be required to provide parental information regardless of their dependency status.