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What Are The College Financing Options? – How To Fund Schooling

March 3, 2012

College Financing

College Financing

When it comes to college financing you may know that their are loans and grants, but you may not know where to start, which is where we come in to help! Being that college can run you anywhere from $10,000 to $100,000 or more, finding financing for college is the main priority of most all students as well as soon to be students. Which if you are intending on going to college in the very near future, it is the best to get started with applications as soon as possible as it will offer you the best chances to become eligible for college financing, which the first place to start is:

Free Application For Federal Student Aid (FAFSA)

The FAFSA is filled out by over 14 million students each year and can be filled out as soon as January 1st on the year that you wish to attain federal college aid. This is the best place to start because the loans offered provide the the lowest interest rates around as well as are fixed interest rate loans, meaning the once you get the loan and say you got it at a 6 percent interest rate, you will pay 6 percent on your loan payments until the entire loan is paid off. This is such a great aspect of these federal college financing loans as the market for student loans are always fluctuating when it comes to their interest rates, so if the market is offering higher interest rates, it won’t matter as your interest will never be affected. Now federal college funding through loans come in the form of three different loans, those being:

  • Stafford Loans - This loan based eligibility off of your financial need and is offered at a current fixed interest rate of 6.8 percent which you can borrow up to $18,500 througout the entire time you are in college. This college financing option also offers a 6 month deferrment to those who attend school at leat half time, which is where you do not have to start paying your loan debt back until 6 months after you have either graduated or dropped out.
  • Perkins Loans – The Perkins loan is also not based off of your credit score but off of financial need and offers a 5 percent fixed interest rate. This loan comes with a 10 year repayment, no accruing interest as the interest is paid off by the government with this loan which also applies to the 6 month deferrment period.
  • PLUS Loans – PLUS loans offer an option for parents looking to provide their children with college financing taking the burden of the debt. This loan requires one has good credit, which the better the credit score the better the chances of becoming eligible for the loan as well as better interest rates present themselves. This loan can be applied for by parents of the student needing college financing, a gaurdian and possibly a step parent and comes with an interest rate of 8.9 percent. These loans can also be obtained for multiple students without compromising how much each student can get.

These federal student loans offering college financing for tuition as well as other related expenses like supplies, transportation, books and more. Now filling out a FAFSA is also super important for the sole reason that you can become eligible for federal grants, which do not have to ever be paid back like you have to with loans. One of the grant programs that come with filling out a FAFSA is the Federal Pell Grant where the applicant can become eligible for up to $5660 a year to use for college financing. You should know that you need to fill the FAFSA out every year that you are in school and are looking for federal school financing.

College Financing With Private Student Loans

Federal college financing loans come with borrowing limits which are based off of various factors, which can limit the amount you can borrow and leave you not enough money to fund your education, which is where private student loans come in. The place that most students usually look upon for private college financing is their bank or other banks, which the bigger banks out there provide, banks like Bank of America, Citi Bank, Washington Mutual among others. Now these aren’t the only types of organizations that offer private college funding, there are also other providers that can be found that specialize in college financing through private loan lending, one of the biggest ones being Sallie Mae.

Now private student loans should only be used when your federal college financing has ran out and you still have tuition to pay for, which is where private loans should be obtained as they cover all your college fees except for what federal aid has already covered.

Private student loans come with higher interest rates and are variable rates meaning they can go up or down anytime. They are also fully credit based, so if you have to apply for private college financing it is best to have a good credit score, whether it be yours or a co-signers, as the better the credit score the better your interest rate will be as well as provide you with better odds in being eligible for attining a loan from a private lender.

Now that you know the drawbacks of private loans, they can still provide you with the money needed to pay for college. If you need to utilize private student loans, the best thing to do is to consult the services for a credit union first, as credit unions are known to offer great interest rates as well as better chances of getting a loan without having a good credit score.

Other College Financing Methods

These methods below can help you minimize your total debt that you accrue during college, and provide you with excellent college financing:

  • Federal Work Study Program – There is over 3000 colleges that offer their students the opportunity to participate in a Federal Work Study Program which is where one can obtain a job through the school where all the money that one earns during this jobs goes directly to paying for tuition. The best part about this college financing option is that the jobs are usually jobs that are related to the profession that one is going to school for, offering networking opportunity as well as getting great hands on training.
  • If you are employed then you can talk to your employer and ask if they provide their employees with scholarhips or grants that can be used towards college financing, and what the requirements are to attain these loans.
  • Grants – There are a myriad of different grant programs that one can apply for. These college financing grant programs are offered for things like different professions, financial need, ethnicity, single parents, adults, teens and more which you can seach for grant programs that apply to your personal situation by doing an internet search.
  • Through Your College – Many schools also have lending programs where they lend their student loans directly and you pay them back to your college, providing another options that can provide you with college financing.
  • Talk To A Counseler – Making an appointment with a guidance counseler where can discuss what college financing options are available to you as they may able to give you information on getting local and national funding and other programs to apply for.