There are a number of college financing avenues available. Let’s look at options for paying college costs in greater detail below:
Providing that monies have been set aside, families can use their accumulated savings to cover college costs. Savings may be in the form of liquid assets, such as checking and saving accounts, in certificates of deposit, savings bonds, investments, stocks and bonds, or in the form of Qualified Tuition Plans (QTP), also known as 529 Plans, or in other Education Savings Accounts (ESA). Monies set aside in a QTP or other tax advantaged education savings account can be used to pay college costs, within stated guidelines. For details on withdrawals and payments from a QTP, please check with your plan administrator or see the appropriate page on the IRS website.
Families can also pull from a current income stream and utilize Tuition Payment Plans to pay the college bill. Tuition Payment Plan options are available from a number of companies and allow a family to pay for direct-billed college costs (tuition, fees, room and board) via a monthly payment plan. Click here for an overview of Tuition Payment Plans.
Families can also rely on future income sources to pay college costs. To that end, a family may utilize one of the many education loan options that are available, such as the Federal Direct PLUS Loan Program from the U.S. Department of Education or private education loan programs available from lenders, such as banks, credit unions, and state agencies.
Loans need to be paid back, and in most cases a family will utilize future income and resources to repay loans during the specified loan repayment period. Loan options are available and for many a necessary part of the college financing equation. Loan repayment will be an added responsibility in the future—one that needs to be taken very seriously.
LOANS ARE NOT FREE and actually can be very expensive. It is imperative that you be a smart borrower, as decisions that you make now will impact your life style and options in the future. However, the reality is that many families may need to borrow loans to finance education. Students should first maximize loan borrowing through the Federal Direct Stafford Loan Program which has favorable terms, various repayment options, and typically are the lowest cost loans.
PLEASE, PLEASE, PLEASE! Before applying for any type of loan, whether the PLUS Loan from the U. S. Department of Education or a private education loan from a lender, please be sure to first explore all of the available options before borrowing. When possible, utilize a Tuition Payment Plan to pay the college bill, since costs associated with Tuition Payment Plans are very reasonable. If after utilizing this option you find that you still need more resources, then carefully consider some of the available federal and private loan options.
These related articles on paying for college may prove helpful:
For more information on paying for college, see Financial Aid Sense – a vital read for anyone with college bound students. Check out what our readers are saying about Financial Aid Sense.