So, your child has done her part: Great grades, strong SAT's, taken pretty much every AP course in high school, two sport athlete...Top 5% of her graduating class!

I have Good News and Bad News:

Good News...She has been accepted into the school of her dreams!

Bad News...The four year price tag has you thinking outside your comfort zone!?

The ball is in YOUR court! Of course, you've done your homework. At this point, she has been offered every state, local, religious and civic grant/scholarship available. You've enrolled in a tuition payment plan that meets your budget. In addition, she is kicking in with student loans and a nice work/study job on campus. You've even asked your own father if there are any "rainy day" funds squirreled away that can lighten your load. Bottom line: You are STILL short by a couple thousand bucks!

Plugging the Gap: PLUS and Private Student Loans?
A PLUS (Parent Loan for Undergraduate Student) offers a fixed interest rate. There are a few "safety nets" to fall into if you cannot make on-time (or any) payments if financial hardships come your way. By all accounts, it's considered a safe option to fill your funding gap! A PLUS Loan would be in your name, on your credit report, and you would be responsible for paying up to a maximum 10 year period.

There's another option: Co-signing a private student loan. Although "variable" private loan rates can be very attractive, your own FICO, debt-to-income, credit standing etc., should be equally fetching if you hope to secure a best-of-the-best interest rate offering! And, like the PLUS Loan, there are "safety nets" if needed.

So, consider this, your daughter takes out a private student loan and you act as a co-signer to that loan. Of course, the loan is in both names (your daughter AND yours). You basically are acting as a legal "fall-back" if your daughter will not/cannot make the payments.

Seems like a "win/win" to me! You monitor (bug/harass/nag) to be sure your college grad is gainfully employed as a tax paying, private student loan making, contributor to society. The lender gets their money with the assurance that you will be the "Lone Arranger" if something goes haywire. And, with an on average lower interest rate, and zero fees, the private loan just may be the better buy?!

Here's the kicker that, in just the past few years, wasn't available to private student loan co-signers...a "co-signer release" option. How does it work? Well, you should first find out if it is available? Then, look into the fine print of eligibility? Usually, the borrower (the person you co-signed for) makes a consecutive number of on-time payments (24-48 depending upon the lender). After making those on-time consecutive payments, the borrower can apply to the lender in an effort to qualify on their own. If approved, you may be excused from the original loan obligation!

(Disclaimer: It MAY be this easy...or NOT...Do your research!)

Perhaps I'm biased, but co-signing your child's private student loan seems like a reasonable option to filling a funding gap, while still offering hope that YOU won't be carrying a college loan related debt (and living like a freshman!) as you matriculate into your twilight years!

It's just something to think about: A Different Point of View!

Ben Carey is currently the Vice President of Sales at Overture Technologies. He is a 22 year veteran in the Student Lending industry (and the Tri-State Association) with extensive experience working with colleges and universities. Ben served in both sales and sales leadership roles helping schools and families make informed decisions about the best ways to finance higher education.

Oh, and one more thing: His daughter is attending the college of her dreams!!