By Christopher
BillSavings.com Brief: College students will more than likely have to take out student loans to pay for their education. There are a variety of financial aid options to choose from including both federal and private student loans. However, before you apply for student loans, do your homework and compare prices and terms from each available loan.
Attending college is one of the smartest ways to get ahead in life. This is because college graduates earn substantially more over their lifetime than those who only complete high school. College also provides students with valuable social lessons as well as allowing them to form lasting connections that will help them get ahead in their career. However, the problem is that college is more expensive than ever. While some parents have enough money saved to send their child to college without having to take out a loan, more than half of college students must take out student loans to pay for college. While it is also possible to receive grants, and scholarships, student loans more often than not pay for the majority of a student's higher education expenses.
If you are starting to apply for college or are a parent of a college bound student, take the time to research the often, confusing world of financial aid. Remember that the more you prepare, the better your chance is of finding the best possible financial aid package. To begin, you will have to fill out the Free Application for Federal Student Aid (FAFSA). This form is available online at www.fafsa.ed.gov or through the student's high school or potential college or university. This form uses a standard methodology approved by Congress to determine the financial responsibility of the student's parents based on income, assets, as well as savings accounts such as the 529-college savings plan. After the calculations, the results will tell the student how much they can receive in federal student loans.
Finding the right student loans
After you receive the results from the FAFSA, you are ready to search for student loans. To begin, use one of the many financial aid websites to begin exploring the different types of student loans. There are both federal loans such as the Federal Stafford student loan as well as a variety of private loans. While private loans do not have as many limitations such as a maximum amount, they generally have a much higher interest rate than federal loans have. In addition, there is also the Federal Perkins Loan Program, which provides low interest loans to financially needy students. All of these loans have different interest rates as well as repayment plans. For example, while most student loans do not require you to start repaying them before you graduate, some want you to begin the process as soon as possible. Although, it is possible in many cases to file for an extension.
Parent's responsibility
As previously stated, parents have a financial responsibility to help their children through college. While parents won't have to pay 100% of the educational expenses, they will have to contribute a certain amount of their income. Additionally, in most cases, parents will also be required to be a cosigner on a student loan. This means that if their child can not or does not repay the loan, the financial responsibility falls to the parent. This is just one more example of why it takes an entire family to put a student through college. This is also, why it is necessary to make some often-difficult decisions regarding the choice of college. For example, while a public college costs an average of $6,185 a year for tuition and books, the cost of a private college costs an average of $23,712 a year. This is why students should choose a college that provides a quality, yet affordable education. For example, parents should think twice about sending their child to a private school that costs $30,000 a year if the student plans to major in a field that does not pay well once they graduate.
8/26/2008
