Paying for College
The following information covers the basics of paying for college. This is information that you should understand (even if you’re receiving financial help from your parents).
Loans
There are many types of student loans available to help you or your parents finance your education. These can range from federally subsidized loans to educational loans from financial institutions.
FAFSA
The FAFSA is the most important form for you to fill out when financing your education. The government will decide what sort of financial aid you receive based on the information on the FAFSA.
Depending on your information, you may be eligible for government grants or loans.
FAFSA applications must be submitted by June 30th. (You can do it online.) Visit www.fafsa.ed.gov for more information.
Scholarships & Grants
You may be able to apply for scholarships or grants based on your academic record and/or financial need. The best thing about receiving scholarships and grants is that they are not loans – you don’t have to pay this money back.
There is an abundance of private scholarships available – check with your school, place of worship, parents’ employers or even your financial institution.
Private scholarships are generally given based on academic performance and/or financial need. Scholarships from your college/university are generally given for athletics and academics. Grants are usually based on financial need.
Repayment of Loans
First things first, you don’t have to start paying your loans until you graduate. You or your parents may choose to pay while you’re in school, but it is not required.
Once you’ve graduated, most student loans give you a grace period before you must start repaying. Grace periods typically fall between 0 to 9 months long.
Consolidation of student loans is generally a good thing; you have the ability to consolidate all of your government loans into one. You can do this during your grace period and most times you can lock in a much lower rate. Keep in mind that you can only consolidate these loans once.
Most student loans offer a few repayment options. The most common are listed below:
- Standard repayment – payments are the same each month
- Graduated repayment – payments start small and gradually increase
- Income-sensitive repayment – payments are a percentage of your monthly income
- Extended repayment – payments extend over 25 years (if eligible)
The best thing to do is to contact your creditor and see what repayment options they have available for you.
Notes About Repaying Your Student Loans:
Tax Deductions: You will be able to take a tax deduction on the interest you pay on your student loans each year. Visit www.irs.gov for more tax information.
Further Education: If you choose to go to school for a graduate degree or a different degree, you can defer your payments while you are in school. Basically your student loan payments go on hold while you’re in school.
Getting the most out of payments: Check into possible ways that you can get interest rate savings. For example, if you decide to have your payments automatically withdrawn from your checking account every month, you may save .25%. Another good perk is when you make on time payments it can save you up to 2% on your interest rate. Find out if your creditor offers any types of payment incentives.
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