Student loan debt is at an all-time high and only continues to grow. It’s a sobering fact, especially considering that most students headed to college need some kind of financial assistance. The good news is you decrease your chance of taking on crippling debt or defaulting when you keep yourself informed about the ins and outs of student loans.

Finding financing

Due to the high cost of college tuition many families are unable to pay for college with savings alone. Traditionally, student loans have provided an important avenue for allowing students to be able to go to college. Even though paying for school may seem like a daunting task, there are several steps you can take to find financing:

• Talk to your school’s financial aid office. Employees at financial aid offices are trained to help people find financing for school and have dealt with many others in the same situation as you. Ask them what options are available for your financial circumstances.
• Look for scholarships and grants. It’s a good idea to look for scholarships and grants regardless of how easy it is for you to find student loans. Why borrow when you do not need to? High school guidance counselors and college financial aid offices usually have information on available scholarships and grants. Information is also available at finaid.org.
• Consider a home equity line of credit or loan. For parents with a significant amount of equity in their homes this may be a good way to help finance college. However, it is important for those considering this option to remember that home equity lines and loans are secured debt. You could lose your home if you do not make payments.
• Stay informed. The laws surrounding student loans typically change every few years. Watching or reading relevant stories in the news will help you stay aware of your options and new opportunities.

Preparing for the future

For parents, the current student loan crunch demonstrates why it’s a good idea to save for college. Even if student loans are readily available when your children go to college, saving allows them to rely less on loans, which they will need to pay back after they graduate. If you’re saving for college, take advantage of available tax-saving vehicles.

For example, 529 Plans, Coverdell Educational Savings Accounts, and Series EE Savings Bonds (issued by the Department of the Treasury) allow you to invest savings for college and not pay taxes on earnings, as long as the funds are used for qualified education expenses.

College tuition is high, and paying for college is often not an easy task. However, there are several options for funding available, and being well informed can help you prepare for and manage this cost.