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Jan 11, 2017 02:02 AM EST

Most parents want to pay for their kids' college. But there are those who are stuck in the middle. This means that parents who try to apply for financial aid find themselves unable to qualify for the aid and they are also unable to encash.

What is the solution for these parents? For starters, parents' children can take out federal student loans. But for parents who are considering on covering their soon-to-be college student kid, there are two options.

Parents can either try to get a student loan (for parents) or look at home equity, as reported by TreasureCoast Palm. After all, according to a research from The College Board, it takes more than ten years to recover the cost of the average degree.

Between loans and home equity, which is better? It depends. It is best to think about the factors to help you decide. After all, financial future, education and one's home is on the line.

When taking out a federal student loan for parents, they must submit the Free Application for Federal Student Aid, as reported by Nerd Wallet. This form will also enable the child to be eligible for scholarships and grants. The advantage of getting a federal direct PLUS loan provides the option to defer payments while the child is in college and allows flexible repayment plans. But there are fixed interest rates, loan fees and annual tax deduction limits.

If a federal loan does not work, a private lender can help out if one has a high credit score. Having a high credit score can qualify parents for a lower interest rate.

With home equity now, home values are high and mortgage rates are low. Parents can tap their home equity by opening a line of credit, get a home equity loan or a cash-out mortgage refinance. The benefits are low interest rates and provides tax deduction for the interest paid. But the risk is high when it comes to home foreclosure if parents can not pay.

Here is a CNN video on how to get home equity loans:

Follows Student Loan, Home Equity, Student Debt, federal loan, Federal Plus Loan, financial aid
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