SayStudent.com

posted August 01, 2007

Parents of college students would like to see their child succeed in school. A college degree brings the benefits of higher pay, better career, and a more stable life. But the cost for a college education can be enormous. The annual cost to attend an in-state public school averages $16,000 or more; $26,000 for out-of-state schools. And attending a private school is even more; averaging around $33,000 or more per year. Who has that kind of money?

Qualifying students can apply for scholarships, college aid assistance, and federal student loans. But the total amount awarded may cover only half of the total academic costs. Students often turn to their parents for assistance.

Parents can help finance college using the federal PLUS loan, which can pay up to the total academic costs minus the financial aid received by the student. But the PLUS loan has restrictions. And most parents do not want to take on the full burden of college financing. There is a better way. We call it:

The Bank Equity College Financing Program

It's quite effective. You use your bank equity to pay the financing costs of a private student loan taken out in the student's name. This allows parents to help pay for school without taking on the full responsibility. Let's review how this concept works.

1. Open a Home Equity Line of Credit:
   get a home equity line of credit secured by the equity value of your home. Open the maximum credit line at the lowest LTV percentage. You will use your equity line like a bank to finance college and other related personal needs (explained below):
   
   calculate your LTV loan amounts
   
   (note: if your home value does not qualify you for a credit line at 80%LTV or less, then apply for a credit line at 90%LTV. Your credit line must be large enough to pay down debts and finance college as explained below)
   
   
   
2. Develop a College Budget:
   get with your student to develop a college budgeting plan for the academic year. This will help the student estimate the costs that will be expensed for the month. You need to budget for financial aid, tuition, housing, books, transportation, entertainment, and other personal needs.
   
   Download FREE our college budgeting worksheet to assist you in this task
   
   
   
3. Apply for Student Financial Aid:
   your budget plan will show how much additional aid you will need to meet estimated costs. You student will then apply for a private student loan using the parent as the co-signer.
   
   Students can borrow up to $30,000 per year ($40,000 for certain schools where the cost of attendance has been determined to exceed $30,000) to pay for tuition, housing, college supplies, computer, and other education-related expenses. You want to borrow enough money to meet your budget plan.
   
   Since the student will not have a credit history to qualify for the loan, the parent will need to act as co-signer. The student will have the option to defer payments until after graduation. Do not select this option. Select the option for immediate principal and interest repayment.
   
   
   
4. Setup a Money Account:
   The money borrowed from the private student loan will be sent directly to the student. The student will deposit the funds into their bank account for use to pay school expenses.
   
   The best way to manage, expense and protect student money is using pre-paid cards instead of ATM and credit cards. With pre-paid cards, you upload money to the card as budgeted in your plan. Pre-paid cards can be used just like credit cards to pay for living and personal expenses at college and local merchants. The spending amount on pre-paid cards is limited by the amount loaded to the card. You can monitor pre-paid cards online to help the student live within the budget.
   
   
   
5. Parent Pays the Monthly Loan Payments:
   the monthly payments from the private student loan will begin 30-60 days after the first disbursement. Parents will use their equity line account to make those payments on behalf of the student. You will continue to make monthly payments while the student is in school.
   
   
   
6. Student Takes Over the Monthly Payments Upon Graduation:
   when the student graduates from college and lands a good job, the student takes over the monthly payments from the parent. Parents can even get a co-signer release if certain parameters are met. The student continues to make payments until the loan is paid off.
   
   

So What Are the Benefits

• First:
  the parent is able to assist the student pay for their college of choice by co-signing the private student loan.
• Second:
  the parent is helping the student through college by making the monthly loan payments while the student is in school.
• Third:
  the student assumes some responsibility for their college expenses by taking over the payments upon graduation.
• Fourth:
  the parent can use their home equity line to reduce their overall financing costs.

We have a bank equity program where you can maximize your equity savings for paying college, reducing debts, and paying down your mortgage. And you don't need to change your cash position.

For information about how to maximize the benefits of this program:

• view demo of the bank equity program
• view our 10-step success plan

This article was written by Krayton M Davis
Executive Principal, nBuy Associates
nBuy Associates owns and operates the SayStudent college financing network

Other articles of related interest:

• What you should know about private student loans
• Understanding the costs of private student loans