By this point in time, many students have decided on which college they plan on attending in the Fall and have sent in a deposit to hold their spot in the incoming college class. Now reality sets in and families need to figure out how to pay for a college education. Certainly a college education is a large investment and fortunately their are lots of options for paying for college, some better than others. There are many steps that one can take in covering the costs of college and I will outline those steps in this article.
Hopefully you have applied for financial aid and been awarded a financial aid package by the college. Aid packages may include money from grants and scholarships, federal loan programs, and work programs. In most cases, although financial aid awards from college are key in meeting college costs, the financial aid offered will not cover all of the related college expenses. The reality is that even with financial aid from colleges, most families will still need to come up with additional funding.
Most people don’t have all of the funds needed to pay for college readily available and it may be necessary to pull from a number of different sources when figuring out how to pay for college. Keeping in mind that it is best to take advantage of the lowest cost options, I will start with those such options first.
After applying any financial aid funds that were awarded, families can figure out the balance due to the college. One of the lowest cost options available to cover college expense is a tuition payment plan. Typically, most colleges have a relationship with a tuition payment plan administrator and will provide families with details about available plans. Essentially, a tuition payment plan allows a family to pay their college-related expenses over the course of a designated time period, typically over 8 to 10 months, instead of having to pay a lump sum prior to the start of each semester. Tuition payment plans allow families the option of spreading out payments, making it more manageable for many. Usually there is a reasonable fee to join a tuition payment plan, however, the cost is much less than paying interest on loans. More details of how tuition payment plans work is available on this site.
Outside scholarships are a great way of funding college and are available from a number of sources. Please be sure to check in with the guidance office at your high school and apply for any available local scholarships. In addition, scholarships are available from national and state-wide sources as well. See the information on Scholarships Searches on this website. Although there is a lot of leg work and time needed to search and apply for scholarships, it can prove very fruitful if you make the effort.
If a family needs additional funding beyond what they can afford in a tuition payment plan, there are many different types of loan programs available. If the student received a financial aid award letter from the college, their financial aid package may have included either one or more federal loan programs. The most popular of these federal loan programs includes the Federal Perkins Loan Program, Federal Stafford Loan Program, and the Federal Unsubsidized Stafford Loan Program. Details of each of these programs can be found on this website by following the links provided above. These federal loan programs do provide fair interest rates, fees, and various repayment options to borrowers. If a student was determined to be eligible for one of the student loan programs, the program name and amount would be listed on the student’s financial aid award letter. If found eligible, then the student would follow the instructions provided by the financial aid office to complete the paperwork for those loan programs.
Another popular federal loan program is the Federal Parent PLUS Loan Program which is a loan available to parents of undergraduate students who meet certain eligibility criteria. Parents need to first complete an application for this loan which will determine their eligiility, based on credit and payment history. If approved, monies would be available to parents to help cover the costs of college. Parents can borrow up to the difference between the total cost of education minus the total amount of financial aid awarded. The interest rate for the PLUS Loan is 7.9%. More information and details on the PLUS Loan Program can be found on this site.
In addition to the funding options listed above, families have access to private education loan programs offered by banks, credit unions and other agencies. Private education loans are based on credit and the terms of these loans vary greatly between sources and should be looked at very carefully. It is important for familes to carefully compare private eduaction loan programs so they know all of the costs associated with borrowing through loan programs of that kind. Our article entitled Private Loan Considerations gives you a list of questions and guidelines when comparing private education loans.
So as you can see, there are many options available to families to help fund a college education. Obviously, free money such as scholarships should be maximized as well as financial aid sources provided by the college via the financial aid office. For those needing loans to help meet college costs, please just be sure to understand the terms of any loans before applying for and accepting loans.
Lots of information is available to you about college financing in particular as well as related college planning. Please visit Financial Aid Sense to check out all the information about financial aid and college financing. Best of luck in your college journey!
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