What to Do When Your First College Bills Are Shockingly High
"Private loans help fill gaps when federal student loans aren't enough," he says. "We see a lot of people looking to private loans when students have accounted for the basics but not for new shoes or concert tickets or a meal plan. They just need a few thousand dollars."
Although this option is helpful for many families learning their way around a college budget, Dinsmore cautions that this loan needs to be looked at as a one-time only occurrence.
"As soon as you take out that money, right on the heels of that you've got to set a budget and talk about the choices you've made so far this semester so you don't find yourself in the same situation next year or next month," he says. "This shouldn't become a habit, and it's shocking how many students just don't take time to sit down and do a formal budget."
Another borrowing strategy most parents have probably already considered at some point are wealthy grandparents, says Steve Williams, vice president of financial planning with BMO Private Bank. Instead of a Christmas gift or birthday gift this year, children could ask their grandparents for a college fund boost."Wealthy grandparents are always a good college planning tool," Williams says. "Most grandparents like their grandkids more than their kids, so this is a legitimate option." While a $1,000 or $2,000 annual gift might not break grandpa's bank account, it can be incredibly helpful to a struggling student's budget, Williams says. Also, giving to grandchildren is something most grandparents feel good about. "I think most grandparents prefer this kind of giving to presents since they know it's a good cause," he says. "They just need to be made to feel like it's a good investment. You may even want to Photoshop a picture of your kid with a cap and gown on in front of their college, just so grandma and grandpa can feel like it is a worthwhile use of their money." When small loans and favors from parents aren't enough, Dinsmore suggests taking out a home equity loan, which lets families borrow money against the equity in their house and property.
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