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- Paying for College
Older Parents With College Bound Kids and Student Loans
Most think that many adults have kids in their 20's, 30's. So by the time they reach college, the parents are at least 38-50. However, there is a large block of adults they waited further and did not have kids until 35-45. It is more common than you think. Sometimes, the parent role is revisted a second time during the second\third marriage. Thus, while some may look like a kid's grandparent, in reality, they are the dad or mom.
The one thing one should never do is co-sign a student loan. This puts you on the hook forever, should you student fail to repay. You may be enticed by lower interest rates, just don't. Students cannot be discharged in bankruptcy and you still could be on the hook if you student child dies or disabled. Worse, if your student child is late on payments after on the job, this will also hurt your credit. Plus, it will create a nasty parent-child talking point if things sour.
If you are 62+, with those student kids, you can take social security benefits early and you may even get an extra payment of one-half of your benefit award. The limit is usually 150% of your benefit award. This money can be used for anything.Even if you have kids years away from college, you still can get 50% of the award until 18 or 19. This money can be used to invest for college education. A married couple can still do this even if one continues working normally until 65+. Another idea is to file for the benefits but suspend them for a few years to allow dependent kids to collect beneifts on their parent's earnings. Some, borrow up to half of their 401k (up to a max of $50K) and then repay the loan at low rates within a maximum of five years. If you lose your job, the loan must be repaid in 90 days or it will be considered a distribution and subject to 10% tax. This loan to yourself also will boost your income status on a student loan application. A way around this is to open a Roth IRA, which allows distributions tax free.