Paying for college can be a daunting task for many students and their families. In addition to the typical confusion over all the available options for paying for college, there is the aftermath of the financial market meltdown, tightened credit and recent federal government changes to student loan structures. At the same time, two primary sources of education funding have diminished over the last few years — savings and home equity. Altogether, these factors have had a profound effect on families’ ability to pay for college.
“The stress of how to pay for a college education leaves many students and families feeling overwhelmed and frustrated,” said Kevin Walker, co-founder and CEO ofSimpleTuition.com. “It can be a challenge figuring out all the options that are available.”
SimpleTuition offers seven steps that students and families should take in paying for college:
1. Calculate The Cost Of Attendance – Most of this information can be found in financial aid letters and on college websites. Make sure to include “other” expenses beyond tuition and room and board: books, computer, travel, etc.
2. Use Free Money First – This refers to scholarships and grants, which do not have to be repaid.
3. Take Advantage of Federal Work-Study – These part-time jobs are usually on campus and, in addition to helping to chip away at your college bill, can provide valuable work experience.
4. Contribute As Much Cash As You Can – This reduces the need for borrowing and can come from various sources: parent’s jobs, student’s summer jobs, family savings, and helpful relatives.
5. Exhaust Subsidized Federal Loans – These need-based loans include Perkins and subsidized Stafford loans. These have low, fixed interest rates and interest does not accrue while in school.
6. Maximize Unsubsidized Stafford Loans – Unsubsidized loans also have a fixed interest rate, though interest does accrue while the student is in school.
7. Seek Gap Financing – If there is an outstanding balance, there are federal PLUS loans and private student loans. PLUS loans are taken out by parents, who are responsible for repayment. Private loans are in the student’s name, but usually include a credit-worthy co-signer. Note that private student loans are not federally regulated and terms can vary between lenders, so it’s important to compare your options to find the right loan for you.
Students – what are some ways you and your families manage college costs? Comment & share below!
For more financial aid advice, check out StudentAdvisor’s Student Loan Help Guide.