Paying the College Bill

Congratulations on being accepted to college! Now the time has come to figure out how you are going to pay the college bill! At this point hopefully you have received your financial aid award letter from the Financial Aid Office at the college that you are planning to attend! It is important to stay in close contact with that office and maximize any financial aid opportunities that are available through the college (including federal, state and institutional financial aid sources).

Navigating the college financing process and figuring out how to pay the college bill can be a difficult process, however, there are many options available and we offer a few suggestions as to how to best approach the process. Be sure to take into consideration all of the college costs that you need to account for during the entire first year of college. Costs will include tuition, room and board, books, personal expenses and transportation and in many cases a laptop and related school supplies. Make a list of all the costs that you need to cover for the whole year so you have a solid sense of what to expect. Then subtract all awarded financial aid sources from the total cost. The balance is the additional amount that you will have to come up with for the year to cover all college costs. There are a number of resources available to pay the college bill, and several articles on this site are devoted to examining the different options available to families.

Families can utilize savings, monies in 529 College Savings Plans, or can borrow against the equity in their home. In addition, colleges typically will offer a Tuition Payment Plan whereby families pay the college bill over a certain timeframe, in installments, typically over an eight or ten month timeframe. This is a low cost option which allows you to spread out payments without incurring huge interest costs like in the case of some education loans. Typically families will use money from their incoming resources to cover their Tuition Payment Plan responsibilities. For those that do not have resources available, then private education loans or Federal loans may be their best option.

Private education loans, also referred to as alternative loans, are credit based loans offered by lenders, such as banks, state agencies, credit unions, as well as private businesses. Private education loans are a popular option for paying the college bill; however, it is important to note that education loans do incur a cost, such as origination fees and interest expenses. Please investigate all financial aid options from the college or university, outside scholarships sources, and the Federal Direct Subsidized Stafford Loan Program(s) prior to borrowing private education loans due to the costs associated with borrowing.

Since private education loans have costs associated with borrowing, you should carefully compare the fees, interest rate, terms, repayment details, deferment provisions, and the total cost of the loan. Loan details and repayment terms differ greatly amongst lenders as well as between loan programs, so be diligent when comparing private loan details. There are many articles on this site which will serve as a guide to with regard to private education loan borrowing. Check out Private Loans and Credit, Paying for College with Private Education Loans, Applying for Education Loans, Private Education Loan Considerations, Private Loan Repayment Options, and Preferred Lender Lists.

As noted above, there are many ways to cover the college bill. Some families will use one option or a combination of several options. The good news is that many options do exist and a college education is an important investment!

Check out Financial Aid Sense ~ a practical guide about financial aid and the college financing process!

"Financial aid book and resource for college"

Jan Marie Combs, EzineArticles Basic Author

Fixed Rate vs Variable Rate Education Loans

Happy July! Hope you all had a festive July 4th holiday!

By now, most colleges and universities have mailed their tuition bills which in most cases  are due in early August! So many friends have contacted me recently asking for guidance with regard to private education loans, a necessary financing tool for many. Many friends are clearly overwhelmed by the task of comparing private education loans, thus I thought it would be helpful to post again about this topic and share some helpful links and tips from Financial Aid Sense.

Interest rates play a huge factor in the overall cost of private education loans (as well as any loan, really!) and one such factor to consider is whether your private education loan has a fixed or variable interest rate. A fixed rate is a rate that does not change over time; the interest rate paid for the loan will remain constant through the entire repayment period. A variable rate is very different as the rate will typically change each month, or in some cases each quarter. A variable rate will either be tied to the LIBOR index or to the Prime index and can change often and go as high as the interest rate cap for the loan. In most cases, interest rates are capped at a very high percent, often greater than 20%! Now that is not to say that the interest rate will ever go as high as the cap, however, the possibility does exist.

Many loan providers offer both fixed rate loan options and variable rate loan options and are based on credit. The better your credit, the better interest rate options you will have. The article on the American Saves website gives a nice overview of credit and the relationship to private education loans. In addition, our article on Private Loans and Credit also shares some good info on the relationship between credit and loans.

When shopping for private education loans, please be sure to compare loans very carefully. Fixed rate loans typically will have a higher interest rate since you are locking in your rate for the entire loan term. Many borrowers like this feature as it gives peace of mind against rising interest rates and allows the borrower to plan their repayment down to the penny. However, for that peace of mind comes a higher priced loan. Those that want the least expensive loan should consider a variable rate education loan, however, need to understand the risk involved with borrowing. If market changes force rates to creep us, the borrower needs to be prepared to repay a higher priced loan.

A Primer on Fixed Rate vs Variable Rate is available on the US News Site – I thought this article might be helpful. Carefully shop around for private loan before borrowing and be sure to ask many questions – See our article about paying for college with private loans and specifically the list of things to consider when borrowing a private loan as a guide – it could save you money!

Thanks for joining us on Financial Aid Sense. If you know of anyone who will be entering either their junior year or senior year in high school, Financial Aid Sense is a vital read!

Jan Marie Combs, EzineArticles Basic Author

Private Education Loan Considerations

Believe it or not, it is late June and that means that college tuition bills will be mailed out very soon, most with a due date of August 1st! Although we hope that many of you have received scholarship monies to cover the cost of college, realistically many need to turn to federal student loans and private education loans to help cover the college tuition bill.

Before borrowing a private education loan program, please please please be sure to carefully compare loan terms from a number of different loan companies to be sure you are getting the best possible loan options available and best for your specific family situation.

There are some helpful resources that you can look at which will help guide you through the process of reviewing and borrowing an alternative education loan.

Check out the articles on Private Loans and Credit, Paying for College with Private Education Loans, Preferred Lender Lists, and Applying for Education Loans. The information will help guide you through the process.

"Financial Aid Book"

Jan Marie Combs, EzineArticles Basic Author