January 30, 2013 | | Leave a comment You are in! You have your acceptance letter. You know where you are going to live and what you want to study (for now). It is all perfectly perfect, except for one little thing: money. You got what financial aid you could from the school in terms of scholarships and grants, but you still don’t have all your bases covered. So what are you going to do? How do you make up the difference between your actual costs and the monies you have? Here are six ways to get help from your family, friends, and employer to pay for college: 1. “Mom, Dad, can I ask a big favor?” Of course, you’re going to hit up your parents for help first. According to a Sallie Mae and Ipsos study in 2012 on how the average American family pays for college, 29 percent of costs covered were from grants or scholarships, 28 percent from parent income and savings, 18 percent from student borrowing, 12 percent from student income and savings, 9 percent from parent borrowing, and 4 percent from relatives and friends. You can see more statistics at their site. So maybe your parents were ahead of the curve and have been putting money into a 529 Plan account, an education savings plan operated by a state or educational institution designed to help families set aside funds for future college costs. Maybe you have parents who have more money than they know what to do with and can easily pull the money from their bank account to fund your education. Lucky you! If not, join the crowd. 2. Loans for Parents There are options for parents (or friends, if they are the willing party) to borrow money for education. The first option is a Parent PLUS loan. These loans are federal loans that can be used for tuition, school supplies, housing, technology, etc. The financial aid you already receive is deducted from the total expenses to calculate the amount that can be borrowed. For these loans, a student must be enrolled at least half time and the borrower has to go through a credit check. The great thing is that this loan’s interest rate isn’t tied to the credit score of the borrower as with private student loans. It’s a fixed 7.9 percent, which hasn’t changed since 2006. There are origination fees based on the amount of the loan, but no collateral is required and the interest paid on this loan may be tax deductible. The money that is loaned is sent from the U.S. Department of Education and goes directly to the school in at least two installments. If there are any funds left after fulfilling the costs for tuition, fees, room and board, and other charges, your parents get the remaining money, but it has to be used toward education. There are also GradPLUS loans for parents to look into for graduate students that, similar to the PLUS loan, can be used to cover any expenses not already covered by other financial aid. 3. A Little Home Equity Goes a Long Way Another option for parents is a home equity line of credit. They may get a better interest rate than with a PLUS loan and if they itemize their taxes, the interest is deductible. They would have to check with their bank to see if this is a possibility because they may not have any home equity to borrow against, or maybe the bank won’t open a line of credit right now. They’ll also want to verify the interest rates because these are variable. These loans use the house as collateral so they are riskier. If the loan can’t be repaid, they are in jeopardy of losing the house. Or if the house is going to be sold, it creates problems. 4. Hitting the Retirement Accounts Early If neither of those options work for your parents, there is a less desirable route of taking a loan from their 401k fund or withdrawing from an IRA retirement account. It depends on the plan the 401k is part of if it is allowed, but it require requesting a hardship withdrawal. It would be limited in the amount that could be used and would be subject to penalties. Typically these loans have to be repaid within 5 years. For IRAs, there wouldn’t be a penalty for taking money out for college tuition, but your parents would be taxed on all the money that came out. 5. The Dreaded Private Student Loan As there are for students, there are also private student loans for parents, family or friends to help pay for college expenses. These have some benefits, such as the money goes right to the borrower to distribute and can cover those who are in school less than half-time. Repayment starts soon after the lump sum is sent out. Not all institutions offer these loans to parents or friends, but Wells Fargo offers one where you choose your type of interest rate, fixed or variable, as well as your payment plan. Let’s pretend your parents or friends don’t want to take out a loan or borrow against their house or dip into their retirement. You may be down, but not out yet. There’s one more option to explore: seeing if your employer will reimburse for your education. 6. Seriously? Your Employer? There are many companies that have an interest in seeing their employees better themselves and, in turn, that translates to a better work product, better loyalty, and a better company. Some businesses are willing to fund education to get that. There are different tuition assistance programs depending on the company. Some require that the courses relate to the work. Some programs require that the employee stay with the company for at least a year. (You can see why they don’t want to pay for your education and have another company reap the benefits of it.) Some companies will pay a certain amount a year to help offset the costs and some will reimburse you the cost of the courses after they are complete. No matter what the scenario is, any assistance from an employer is better than no assistance. If your workplace has an HR department, ask them about a tuition assistance program. Some companies may not have one yet, but if you can present a valid case in a professional manner of how it would benefit the company, it may open new doorways. College is expensive, no question about it, but it’s also worth it. If you can’t do it alone, hopefully someone who cares about you, or has an interest in you, can assist you by helping finance your schooling.