If you’re going to college or grad school in the fall, in the next couple months you’ll be making critical decisions about how you’ll finance the next school year.
There are so many different options and loans available to you; it can get confusing at times. Hopefully I can help clear up some of the confusion.
You probably realize that grants and scholarships are the best place to start. This type of funding doesn’t have to be repaid, so it’s like getting “free" money for college.
Next, you’ll want to consider any money that you have set aside for school, whether that’s a college fund, your own savings, or money your family can provide.
Once you’ve worked through these funding options, your next step is to look into your options for borrowing. Most students will qualify for the unsubsidized Federal Stafford Loan, which is not based on financial need. The subsidized Federal Stafford Loan is based on financial need, and with this loan, the federal government pays the interest while you are in school.
Federal Stafford Loans do have borrowing limits, so even with these loans, you may need additional funding to cover your college costs. At this point, you have a couple different options — go with a federal loan for parents or use a private student loan.
It’s at this point that you have to dig in and do some research. No one choice is right for everyone. You have to decide which loan is right for you based on your particular situation.
Questions to ask when comparing eligibility:
• Who is the borrower on the loan?
• Will I need a cosigner and under what circumstances can the cosigner be released?
• Am I eligible if I am not going to school at least half time?
• Can I borrow for past due balances?
• Do I need to be enrolled in a degree-seeking program in order to qualify?
Questions to ask when comparing the costof student loans:
• What are the ranges of available interest rates?
• Is the lender offering fixed rates, variable rates, or both?
• Are there any loan fees?
• What types of interest rate discounts are available?
• What will the monthly payment be upon graduation?
Questions to ask when considering repayment:
• Is there a grace period after graduation?
• How long is the repayment term?
• Who will service my loans?
• What repayment options are available?
• Are there deferment or forbearance options?
• Is loan forgiveness available and under what circumstances?
Even though it may seem like a lot of work, it’s well worth it to research and understand the details of any student loan you’re borrowing. Down the road, when it’s time for repayment, you’ll be glad you did.