Virtually every college award letter will not cover the full cost of the first year of college. The bill for the first semester comes due on August 1, which is a little over three months away. How is your family funding the award letter gap?

This article will outline many of the loan options available to you for funding the gap. More than 90 percent of the time, there is an unmet need from the college financial aid award letter. That unmet need will normally range from $10,000 to $35,000 per year.

Now that we have a ballpark college loan amount, we can look for ways to reduce it. Remember that this exercise will happen every year for four years. The ballpark can be reduced by savings, local or national scholarships, future work in high school or a summer job. I do not recommend relying on work during college to pay the tuition expenses. That money will typically be used for spending money.

Also, for parents hoping for an athletic scholarship, if your son/daughter is not receiving recognition in a sport as an outstanding high school sophomore or junior, it is unlikely that they will receive a college athletic scholarship to help reduce the ballpark costs.

Before we discuss the two best sources of money, parents must first consider the degree to which they are willing and able to pick up the remainder of the tab for the next four years. That is an individual family decision and it is one made knowing that the process started with one child may have to be replicated with other children someday. That is, if you secure loans for one, you normally secure loans for the other(s), in order to be fair.

If the students are selecting a major that will lead to a well-paying career, then the students themselves will be able to pick up the tab. For example, careers in computers, engineering, mathematics and science, can easily lead to jobs paying above $60,000 within a few years after graduation. The students therefore can fund the loans themselves with the help of a co-signing option.

It should be noted that in the past 13 years of discussing funding options for college, I have never advised students to exceed $100,000 in total loans for a $10K/year amount. That amount is for the majors listed above. The amount is much less for careers in the nonprofit world.

My definition of the best college loan for the parent is the one which costs you the least. The main purpose of college is to have graduated students become contributing members of society. A large part of that evolution is to teach them about loans. Loans have many adult financial qualities such as monthly payments, late fees, budgeting considerations, financial prioritizing considerations, and assistance in establishing a credit score. It gets the students’ attention and focus as to why they are going to college, since having a well-paying career is the best way to pay off the loans. It also reminds them that the “free ride” that they have enjoyed with their parents is soon ending.

If you, as the parent, have decided to pay some or all of the unmet need, then the first source for a college loan that you can take out for your child is a home equity loan. Right now there are fixed interest rates of approximately 5 percent. These loans, which are called HELOC (Home Equity Line of Credit), are the best available. The terms have become more onerous lately, so beware.

The other choices have higher interest rates. For example, the government has loans for parents called Federal Direct Parent Plus Loans. Go to for more information. The loan rate percentage is 7 percent and there are substantial fees.

The second-best source of money is the student themselves. This option is called a co-signed loan. These loans are a combination of responsibility of the student and the parent. These loans are called co-signed loans and while the major responsibility for repayment falls on the student, the parent becomes legally liable for the loan if the student defaults or is unable to repay.

As you know, it is very difficult for students to get a loan themselves, as they do not have a credit history yet. Perhaps you are up to your ears in loans yourself or you may feel that it is a good life lesson for your student to learn the value of money and the consequences of loans. If so, then this option should be considered. Citizens Bank can be a starting point.

The student repayment responsibility begins six months after they graduate from college or stop their education. The parent can be released from the loan after the first four years of timely payments.

Tip of the Day: Parents of juniors can begin to get a sense of the amount of unmet need there will be for a particular college by going to the College Navigator site and looking up the Net Price tab of the college.

Mr. Zorski was in business for 23 years and has been in education for 23 years. E-mail questions to

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