The Thieving Bear

Couponing for the Real World

The Thieving Bear - Couponing for the Real World

Critical Decisions Regarding Student Loans

The cost of a college education increases every year. In fact, these costs are growing at a faster rate than family incomes. People are finding it more difficult to afford college. As a result, many families are turning to student loans to finance higher education.

Consider these key points to make smart decision about student loans.

College costs today

The costs to attend college today are substantial. According to the College Board’s statistics for the 2014-2015 school year, the average annual tuition and fees for a private, non-profit, 4-year college is $31,231. That compares with a public, 4-year out-of-state tuition of $22,958. A student attending an in-state public university will pay $9,139.

Collegedata.com explains several other costs that a student may incur. College tuition may vary, depending on the major an individual selects. The site explains that, for example, the University of Illinois charges a higher tuition level for science and engineering majors. Most universities also charge a variety of fees. Those fees may be for campus transportation or for student athletic facilities.

Students who attend college away from home also pay for room and board. Campus housing and meal plan costs can also vary greatly.

Grants and scholarships

People that need to finance college costs have several choices to consider. The first priority is to apply for grants and scholarships. These funding vehicles can lower the cost to the student. Grants and scholarships may be based on financial need, academic performance in high school, or both factors. The award can be a one-time payment or an award over several years. A student may have to maintain a minimum GPA to remain eligible for the grant or scholarship.

Types of student loans

If grants and scholarships are not enough, many families take out student loans. Student loans may be subsidized or unsubsidized. A subsidized loan means that the loan has a low interest rate. The borrower does not incur interest costs on the loan balance while the student is in school. Subsidized loans are awarded based on financial need.

An unsubsidized loan may also have a low interest rate, but the student does incur interest costs on the loan balance while they are a student.

Navigating the federal student loan process

A starting point for many student loans is the federal student aid process. Families start this process by completing the Free Application for Federal Student Aid (FAFSA) form. This form is used to apply for federal grants, loans and work-study funds through the US Department of Education.

There are several types of loans offered through this government agency. Keep in mind that the family’s personal credit history is a factor with student loans. Some loans require a credit check and others do not. In addition, some loans are only available to borrowers with a good credit history.

Specific types of loans

Here are some of the loans offered through the FAFSA application process:

Direct PLUS Loans are issued to borrowers that do not have an adverse credit history. The maximum loan amount is the cost of attendance, less any other financial aid received. If a borrower does not have good credit, they may be able to borrower by getting an endorser. The endorser signs as a borrower on the student loan. Their good credit history allows the lender to approve the loan.

Perkins Loans are low-interest federal loans that are made to students with exceptional financial needs. In this case, the school is the lender- not the Department of Education. Approval for these loans depends on the availability of funds at your college.

Private student loans

One final consideration for student borrowing is a private bank, or some other financial institution. The lending standards for borrowers are higher at a private bank. You will need to have a good credit history, since these lenders will require a credit check. Private student loans may also have a much higher interest rate than loans through the federal government.

Financing college can be challenging. If you do your homework, you can secure the financing your need to pay for college.

Sources:

http://www.simpletuition.com/student-loans/no-credit-check/

The College Board

http://trends.collegeboard.org/college-pricing/figures-tables/average-published-undergraduate-charges-sector-2014-15

Collegedata.com

http://www.collegedata.com/cs/content/content_payarticle_tmpl.jhtml?articleId=10064

Federal Student Aid

https://fafsa.ed.gov/

https://studentaid.ed.gov/about

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