College Finance Options Available to Students
Student loans may be necessary to fund your college education. With education costs rising, many folks are ill-prepared to pay for college. Besides tuition, there are associated fees, room and board, books, supplies, and general living expenses to consider. Sound choices will reduce the financial burden faced when you graduate. If your plans didn’t include an educational savings account (ESA), 529, or some other college saving plan then borrowing may be your main option.
There are many forms of free money available to you. Lots of schools and organizations provide scholarships. You can qualify for a scholarship based on academic or social criteria.
Educational grants are available through government programs aimed at steering students into government-funded areas of work.
Federal work-study programs offer money to pay for educational costs by allowing students to work for the educational institution in exchange for financial aid. Scour the internet for the preceding options.
Without a rich Aunt Sarah to pay for your education then a federal loan is your first option.
Federal loans are a practical choice because they have a low fixed rate, no credit check, and offer flexible repayment options. The unsubsidized Stafford and Parent Plus loans guarantee acceptance.
Stafford loans are low-interest loans by lenders fully guaranteed by the government against student default. The interest caps at 6.8% and the average payback term is between 10-25 years. With a subsidized Stafford loan, the government pays the interest while you’re in school. With an unsubsidized loan, interest payments are deferred until after graduation.
The Federal Perkins loan program is available to students who demonstrate great financial need. The interest rate is 5%, a 10-year repayment term, and the government subsidizes all interest while you’re in school.
Securing a private loan is also an option. Choose a loan with terms similar to a federal loan. Be wary of hidden fees and fluctuating percentage rates.
Your parents may apply for a Parent Plus Loan locked at 7.8%, depending on financial need. Parents are responsible for paying back this loan.
College Finance Guidelines
Take it from someone who is currently in the predicament, balancing your school and personal funds can be a challenging task to achieve. College students already have a ton on their plate, and finances are the last thing that they want to worry about. But with some careful planning, and learning some good habits, the financial crisis of college can be handled.
The first and most important thing that a new or current student should do is apply for financial aid. The process may seem tedious and aggravating at the time, but getting it out of the way is crucial to peace of mind later on. As someone who has been there firsthand, I can say that being denied financial aid kills a student’s spirit and causes hectic emotions trying to solve the issue. To be denied because of failing to meet a deadline is the worst feeling of all. Even if you don’t receive some high dollar amount, money is still money, and any college student can tell you that it adds up fast.
Another easy tip that any working student can do is set up a direct deposit account for their paycheck. Then, get out a calculator and figure out exactly how much money you need every week to pay bills and have a little personal cash. Giving yourself this allowance will prevent unwanted loss of money. It is far too easy to open your wallet and find that your cash has mysteriously vanished. Learning this habit will keep your money safe from yourself, and ultimately, help you in the long run.
The last thing to remember is good judgment. Do you really need to buy a coffee every morning? Is that dress really worth the price of one of your future textbooks? Little expenses still add up over time to big ones, and when you are dealing with the price tag of college education, you really need to take into consideration every dollar that you have.
Four years of college may sound like a long time, but the reality is that it is a small portion of your life. You may be “poor” for a few years, but compared to the alternative, you will be thanking yourself. For example, if you let a loan get out of hand, you will be paying for interest, and maybe even late fees. With each passing month comes another bill piling higher and higher, and instead of enjoying the financial freedom you could have had, your spending the next ten or more years paying back a loan that cost double the original investment. The bottom line, put in the hard work now so that you can have the freedom you desire in four short years.
Bruce is a digital marketer who currently runs his own blog after years of doing 9-5 work. Follow him on his blog at Salmoninfo where he talks about small business tips, marketing, and finance.