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Four tips to get a college loan

By: Jasper Johnson

Knowing how much you are paying for a college loan and what financing options you have are vital to your future. Although the high cost of attending college is one of the main challenges for both parents and children in the United States, there is a huge amount of resources available to finance your studies. Last year, various federal entities in charge of facilitating access to higher education had financed more than 119,000 million students, according to data from the College Board, an organization in New York City that promotes college education in the United States.

However, this financial assistance is not always enough, especially when considering the rising costs of going to college. After exploring aid and scholarships available, it’s time to look for a loan. To get more knowledge about finance, visit http://financespaces.com.

“The student must first explore the money they must pay that is available in each case. Only after that will know how much you need to pay for college, then you can start looking for different loan options, “, says Myra Smith, executive director of financial aid services at the College Board.

To choose the loan that best suits your needs, consider these four tips:

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1. Fill the financial aid application known as FAFSA

The Free Application for Federal Student Aid (FAFSA – its acronym in English) makes it easy to determine the federal financial assistance to which you have access. The website Studentaid.ed.gov, belonging to the US Department of Education, emphasizes that there are three myths about financial aid that should be cleared. First, it is not true that if parents have a lot of money, a student will not be able to access to help. Secondly, the aid is not only for students with good grades. And thirdly, to fill out the FAFSA, there is a complicated process. For more information on the form, you can go to http://www.fafsa.ed.gov.

2. Understand real costs

The cost of college in the United States is high, but it may be less than what you think if you learn to understand the real costs. According to the College Board, do not be confused with the published price of college tuition, because most students pay fewer thanks to financial aid. For example, in 2012-2013, the average cost of tuition for four years at a public university is $ 2.910 per year, but the net value (which a student must actually pay) is actually $ 8.660 on average.

But what are those costs? In addition to tuition, other major expenses are housing, food, transportation, and books. When seeking for college loan options, a student should focus on the net cost, which means the price of college tuition after calculating all financial aid given as donations, grants or tax rebates to which a student can access. The College Board suggests seeking for a net price to establish what the real cost of each university.

3. Loan Options

These are some of the best loan options for college:

  • Federal Perkins Loans: Universities deliver these student loans with greater financial needs through federal government resources. The interest rate is 5% per year, and no payment must be made while the student is in college. The loan may reach a maximum of $ 27.500 for the whole university years.
  • Subsidized federal loans: These are government loans with an interest rate of 3.4% and are called subsidized federal loans because the government pays the interest while the student is in college. You can get a loan of up to $ 3,500 for the first year, and the amount is increasing every year.
  • Unsubsidized federal loans: These loans government rate is 6.8%, and the student can pay interest while in college or add them to the loan amount. This loan is more expensive, but you can get more money.
  • Federal PLUS loans for parents: Parents can apply for this loan to cover the full cost of education. The interest rate is 7.9% annually.
  • Private, state and alternative loans: These are loans that can be obtained from banks, universities themselves, private organizations and state agencies. These loans require you to have a good credit history, indicating that parents normally have to be supported ( cosigners ). Interest rates are usually higher than federal loans.

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4. To plan and plan ahead

The Department of Education, through the website Studentaid.ed.gov, suggests that before applying for a college loan, a student has to understand that loans are obligations that then have to be repaid with interest. Therefore, you should try to project your future income such as by choosing the study area. According to the Department of Education, Occupational Outlook Handbook Department of Labor is a good indicator of how much money they earn in their profession or trade and what level of debt that can assume.

What can we do to make college debt is not a headache after graduation?

The smartest choice before applying for financial aid would be to consider and look for college scholarships and other financial aid. For examples:

  • Scholarships are free money. Investigate, and make sure you meet the application deadlines.
  • Savings Plan. Parents save a lot of money for education in the future of their children.
  • Studying and working at the same time on campus and is the most typical form of financial aid for students in all universities.
  • Financial aid programs sponsored by the state, by the University and by the companies.
  • Work part-time can also be a good idea to avoid debt. (15 to 20 hours per week)
  • If you live with parents, then the costs for food, electricity, shelter have already been saved.

Remember that universities are not for everyone. Although everyone tells us that going to college is a requirement to succeed, that’s not true. There are technical schools that offer courses such as mechanical, therapeutic massage, machinist, etc. These types of jobs offer good wages and job growth opportunities, and the cost of education will be lower.

Remember unpaid student debt has a negative effect if it is not paid properly. When you finish studying, the chances are that you must start with negative credit in the workplace while many companies will request the credit report to get to work. Remember to consider carefully before applying for a loan.

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