Prudential Financial has issued a new white paper to help families figure out how to pay for college education.
Titled “Paying for College: A Practical Guide for
Families,” it emphasizes seeking out all potential sources of financial aid,
rather than heavily relying on student loans, which Prudential says can
strangle a family’s finances.
“It can be a daunting process, but well worth the effort, especially if it means avoiding large amounts of debt or not dipping into retirement savings,” says Caroline Feeney, president of Prudential Advisors. “If it seems too intimidating, don’t be afraid to seek guidance because there is a good chance you’ll be able to put the right payment strategy in place that works for your family.”
Prudential notes that 70% of college graduates today enter
the workforce with an average of $33,000 in student loan debt. In addition,
many parents carry college loan debt, with one-third of outstanding student
loan debt held by individuals 40 and older. In total, outstanding student loan
debt in the United States is in excess of $1.1 trillion, Prudential says.
“The good news is there are many ways to make college costs more manageable,” Feeney says. “We urge families to tap in to school resources, guidance and financial aid counselors, as well as their family’s financial professional who can help them make critical decisions around leveraging existing financial resources in a way that helps them protect longer-term financial security.”
Prudential’s white paper covers the variety of aid available: grants, scholarships, work-study programs, tax credits, tax deductions, needs-based aid and merit-based aid. It also examines subsidized and unsubsidized federal loans eligible families can consider, and the new repayment options on federal loans that have been introduced in recent years.
Furthermore, it discusses the variables that affect a student’s access to financial aid, including their choice of school, how much the family has saved for college, and how adept the family is at working through the process of applying for help. Equity in a family home and retirement accounts do not have any bearings on a child’s eligibility for aid, Feeney says.
Prudential’s “Paying for College” white paper can be downloaded here.