I don't 100% understand.

I just read an article this morning on Forbes about parents getting into the "risky business" of co-signing for a student loan with their child. Here it is: http://www.forbes.com/2009/05/14/student-loans-retirement-moneybuilder-personal-finance-loans.html

But here's what I don't understand. Why are they encouraging parents and students to tap a 401k retirement fund or take out a second mortgage on the home when if the parent is willing to co-sign, there are plenty of much safer alternatives that are set up for education to take?

For instance, first the student has the option of Stafford Loans. These have many, many years to repay and are primarily in the student's name. (And while I understand many parent's don't want their child to leave college with debt, I think a little isn't a bad idea because it helped me get my credit established which eventually let me buy my first home and a nice car... and it also helped me take school a little more seriously when I realized it was coming out of my own pocket!) They also have low, low interest rates as well as some have subsidized interest while you're in school so you don't accrue any interest during that time.

Then there is, at least in Minnesota, the PLUS loan which requires a co-signer and again is similar to the Stafford loan. Then there are Perkin's loans and a whole bunch of other loans that are set up for education- specifically in that there are no payments while the child is in school, interest is low and there isn't a risk of the parent losing a home or a retirement fund.

Articles like that, in my opinion, cause the unnecessary panic about attending college due to the financial situation that is completely unwarranted. I think they also prevent some students from going to college because the parents put it in the child's head (and I have seen this happen) that it's completely impossible because it's too expensive.

Dear Publication Companies: before you cause an uproar in the educational community by showing how risky financially it is for a child to attend college PLEASE show the whole story and not make it appear that the parent has to remortgage their home (an example used in the article) to send their child to school.

Thank you,
Nikki

Now, that being said: do some students not understand that their loans are loans that have to be repaid? Yes. But there is REQUIRED financial aid entrance counseling when a student starts school and REQUIRED financial aid counseling when a student leaves school. If a parent co-signs on the loan should the student have a clear understanding that the student is the primary beneficiary of the loan and therefore responsible for repayment? Yes! However, these issues which seemed insurmountable in the article are ones that a little communication between the parent and student will clear up..

As far as the student not getting a job right out of college? Again, as long as the student doesn't have the unrealistic expectation (or the parent!) of the student walking off the graduation stage into the $500,000 a year job (not saying that doesn't happen, but let's face it, it's not common) and will have an entry level salary for a while and may have to (gasp) make some sacrifices to start some of the repayment on student loans repayment is not impossible.

I have a fair amount of student loans myself from my undergraduate and graduate studies. (And by "fair amount" I mean significantly more than I see people freaking out about in these articles.) And you know what? Once repayment starts my payments for all of them are less than $300 a month. I have made payments on them in the past between colleges, and you know what? I was able to make the payments on my student loans, my car payment on a new car, my rent payment and still have money left over for food on about $12.00 an hour.

So please, please please please when you read articles like this please don't fall prey to the panic that I think they induce. Talk to your financial aid counselors before you say college is impossible. I'll get off of my soap box now. Please go to college.

Oh, and have a great weekend!