How Will You Pay for College?
The only thing harder than getting into college is paying for it. I have put together five tips on earning your degree for less.
Think Ahead—the earlier the research process begins, the bigger the payoff can be. As early as sophomore year, your student should begin collecting and organizing applications, recommendations, test scores, essays, and transcripts. Students should begin applying by junior year in order to take advantage of the countless scholarships geared toward younger students continued education. Creating a family calendar of application deadlines will help you both set realistic goals and stay on top of the mountain of paperwork.
Think federally—the most crucial step in the college scholarship search process is filling out the FAFSA for financial aid. The FAFSA is the Free Application for Federal Student Aid. Available online at www.fafsa.ed.gov or by calling (800) 4-FED-AID, FAFSA is the only way to apply for college grants, scholarship money, and/or college student loans issued through the U.S. government. Get your forms in order now and mark it on the calendar to get your hands on the nation’s biggest financial aid resource.
Think Locally—College tuition could be no farther than your own community could. Organizations such as the Rotary Club, the Jaycees, the American Legion, and Boosters chapters have college scholarship funds set aside specifically for area high school seniors. Memorial college scholarships honoring local residents are also a lucrative, but typically overlooked, resource. Since competition for local funds is significantly less than that for national awards, researching what is offered just around the corner could pay off in a big way. Start by stopping by your students’ high school career office to see what is available, then follow-up by asking prospective colleges about their scholarship, financial aid and grant packages.
Think categorically—your college bound student may be eligible for certain college scholarships simply by virtue of ethnic, religious, and professional affiliations. To find out what kinds of funds your student is qualified for without leaving your home, create a profile through an online college scholarships search engine and let the opportunities find you.
Think Corporately—Businesses ranging from Coca-Cola to Target offer financial aid and grants to thousands of students each year. First, ask about whether or not you or your spouse’s company offers scholarships to children of employees. For information on what outside corporate college scholarships, your student may be eligible for, check out the internet.
Think picking the perfect college was hard? Try picking the perfect loan. Like schools themselves, student loans vary tremendously in terms of size, quality, and student requirements.
Here is where federal college student loans trump private college student loans almost every time. Unlike private college student loans, loans from the government have fixed interest rates—6.8 percent for Stafford Loans, 5 percent for Perkins Loans, and 8.5 percent for PLUS loans—that are significantly lower than those from outside lenders where rates can run as high as 20 percent.
In addition to the principal amount and interest, you will also have to pay origination, disbursement, default, and administrative fees with a private college student loan. These vary from lender to lender; however, students usually receive the best deal when they opt for federal over private student loans. While Stafford Loan and PLUS fees are set at 4 percent, Perkins Loans have no fees at all. On the other side, private student loan fees can range anywhere from 0 to 15 percent, costing students thousands over a 10 to 20 year loan period. Before signing on to a student loan, ask your lender to calculate the total amount you will have to pay back including interest and fees.
Scoring a loan is only part of the battle. Maintaining it is the other. In addition to paying back the principal amount plus interest and fees, some student loans also requires students to remain full-time students for the duration of the loan as well as maintain a minimum GPA. While you are investigating your academic responsibilities, ask about your postgraduate fiscal responsibilities as well. Though the Stafford and Perkins Loans will not require you to begin payment until after you graduate, PLUS and many private student loans require payments to start immediately. Before becoming an official loan recipient, compare rates, read the fine print, and ask your loan representative to outline exactly what they expect from you.
