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Filling the student loan gap

Updated: May. 6, 2022 at 7:01 AM EDT
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RICHMOND, Va. (WWBT) - When it comes time for college, experts say to make sure you and your teen exhaust all forms of scholarships, grants, aid, and work study before you turn to student loans.

Cherry Dale, a financial coach with the Virginia Credit Union, says these days you are likely going to face a gap in funding because even federal student loans won’t pay the entire cost.

“Your student can qualify for student loans and their name that only pays for so much in many cases, especially if you’re looking at a four-year university in-state or even if you go out of state, you’re going to have cost above what your student can borrow. “

Dale says turning to private student loans should be a last resort because they come with higher interest rates and are altogether more expensive compared to federal student loans.

They also usually require a co-signer which puts an additional person on the hook - likely a parent.

If you want to help your child pay for that gap in funding, there are personal loans, home equity loans, savings accounts and 529 plans. Dale says you might also consider Parent PLUS loans.

One of the biggest differences between Parent Plus and other student loans is it requires a credit check. But to be eligible, your child needs to complete the FAFSA.

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