Student Loans & Financial Aid info

In the heat of summer, parents and new to be college students sweat over the cost of college and how they will pay for it. The best approach is to sweat it out just a bit more by doing all the homework and knowing the real cost of college. You need to know where to look for free and cheap money, and determine whether and how to make use of private student loans for college.

Parents and students who are currently in the process of assembling a plan to pay for college will do themselves a major favor by doing much leg work, research, and shopping around when it comes to calculating whether to borrow, how much to borrow, and from whom to borrow. Cutting corners such as accepting a financial aid package without investigating it and over borrowing can cause parents and students serious money problems down the line.

According to a survey of 1,000 parents with children soon to be in college or already in college, 69% of parents believe that their children will have to borrow to pay for it. Yet 57% of parents with children soon to go to college say they have no ideas which student loans should be applied for first, and similar percentages say they do not understand the range of interest rates on college student loans and the many different repayment options.

There are many misconceptions and disconnects when it comes to paying for college, and they can be very costly. Parents and students, especially in this squeezed economy, need to make the effort to understand the terrain and what it takes to make some smart financial decision. Do not just take the first financial aid package that is offered.

Sit down and do the math to learn the true total cost of an education. This would be everything over and above the tuition and fees. Taking into account the cost of books, transportation, housing and food will help prevent students from getting into a jam that forces rash and expensive borrowing errors.

Know the sequence of funds to tap in order to pay college bills. First, look for free money. This usually means scholarships and grants. You have to apply for them. It is worth the effort. The next step for many families would be borrowing, and the rule of thumb here is to locate and secure the least expensive borrowing options available. Look at all the sources available to you, from federally guaranteed (financial aid) and private student loans to personal and home equity loans. Always exhaust the least expensive loan money before moving on to other sources.

You should never borrow a dollar more than necessary. While it is sometimes tempting to use student loans to have a little extra cash, borrowers will regret that decision when it is time to repay the student loan. The worst thing to do is to say I will just worry about it later. You will have to pay back more than just the amount you borrowed; interest will capitalize on most private student loans so minimizing the borrowed amount is critical in managing what you will repay.

Do not let talks of the credit crunch lead to harmful decisions. Federally guaranteed student loans are available to everyone who qualifies, from a variety of sources. Smart parents and students will first fill out the FAFSA form to qualify for federally guaranteed student loans. If they qualify, it is worthwhile to check the interest rates and discounts of several lenders in order to secure the best financial deal.

Consider a private student loan to fill a cost gap, but shop around for those. Just one percentage point difference in the interest rate is significant when it comes to the amount of debt being accumulated.

Be your own best resource for finding the best deals by shopping around. Take the well-informed shopper you are when it comes to locating the cheapest gas, shopping for the best discounts on groceries or comparing interest rates on car insurance, and put that to work on your private student loans as well. Search beyond the preferred lenders of your college by getting on the Internet, visiting your local bank, or credit unions.