With more than 75 million struggling millennials and a colossal $1.3 trillion in student debt, parents should be wary of co-signing on a student loan, as it could greatly affect their future finances and retirement. While Americans highly value a college degree and many parents would sacrifice their finances to help their children, co-signers can be left in the dark if the college plan doesn't go as planned.
The majority of families afford college through college loans, especially when the average yearly cost of a four-year college degree is $80,000 at an in-state public school and roughly $200,000 at a private college. These numbers don't even account for the cost of not graduating on time, which happens often.
Nonetheless, co-signers are "willing to ignore harm to their credit rating and being burdened by loan payments in retirement." According to LendEDU, 57 percent of co-signers "believe their credit score has been negatively impacted by co-signing on a student loan" but "only 35 percent of parents regret [it]." 33 percent of co-signers did not even fully understand the risks of co-signing; and still, 66 percent of parents whose children asked for help on loans co-signed. Co-signers do have the choice to opt out of the agreement via a co-signer release, or if the loan is refinanced. Options such as Parent PLUS loans also require parents to repay the loans, so that they aren't "at the mercy of the student being able to make payments."
If co-signing loans is a necessity for your family, experts recommend having strong and open family communication. Being able to discuss debt, what financial information should be disclosed with children, and "examining the dollar-and-cents details" are crucial for successful co-signing. Either that, or avoiding it altogether. One way in which college can be paid for - sans the financial repayment or burden is through college scholarships, which do not need to be repaid and are awarded for various types of achievements, hobbies, talents and more. No matter your current year in school, there are dozens of college scholarships, scholarships for undergraduate students and graduate student scholarships waiting for you!