Saving for College

College is expensive, it is no secret. Most parents want their child to have the best chance in life and college is a part of that plan. Millions of parents will struggle to afford college for their child. If you have more than one child, it can be even more important to start saving now.

With the cost of college reaching staggering amounts, many parents wonder if it is worth it. Statistics show that college educated men and women earn up to eighty-five percent more money throughout their lives than their high school educated peers. Consider your child’s college education an investment, not necessarily an extra expense.

Grants and scholarships are your first stop when figuring out how you are going to pay for college. These are not guaranteed and should not be counted on when you are making your savings plan. Time is your best asset when saving. Even very small amounts can grow to substantial sums over a few years time. Save whatever you can now and it could really pay off in the future.

Some people have a plan to pay as they go. This can work if you have both parents making a substantial salary and you are able to dedicate one salary to college. Many parents are under the impression that their child can work their way through college. It is true that many students are able to hold down part-time jobs, but the money made is generally trivial and most students’ grades will suffer if they have to work when they need to study. It really is unrealistic to think that your child will be able to contribute much to their education expenses.

Another option is to borrow now, pay later. Student loans and financial aid can be very helpful. Over half, almost two-thirds, of all students in college have financial aid and student loans to get them through. Many parents can take on some loans themselves to help lighten the burden on their children. Some throw caution to the wind and leave everything up to student loans in their child’s name. Consider how much debt your child will be starting their life with. The final amount after four years of college is in the hundreds of thousands of dollars range. This amount can be like owing one or two hefty mortgages before they even consider buying a home. Many people are well into their thirties before they are able to pay off their student loans. What if your child marries someone with just as much debt? The burden can be extremely overwhelming and unmanageable. You need to do what you can now to lighten the load.

Parent loans, grants, scholarships, financial aid and private student loans are usually combined to spread the responsibility around so that no one person is overwhelmed by the whole amount. Many people would never be able to afford college if it were not for student loans, so they are most likely going to be part of your consideration when the time for college approaches. Save as much as you can now to help out your family for the future. If you do need student loans or private student loans to get you over those inevitable humps, shop around on sites that let you compare benefits, rates and flexible terms before you commit.


About the Author: Evelyn Saunders, a retired teacher, is the editor for student-loans.net, a provider of student loans and information on how to get private student loans as well as consolidation.

Saving for college

Saving money for the college years is simple in theory, but can sometimes prove to be a more complicated endeavor to put into practice. Obviously, if you are able, start saving early and contribute to that savings on a consistent basis.
Getting started, it is wise to do some research on current tuition and housing costs as well as taking into consideration the approximate effects of inflation between now and when your children will actually begin their college careers. This will allow you to arrive at an approximate per semester or per year goal per child. Next, calculate the amount you will be able to comfortably contribute on a regular basis taking into account the time span between now and high school graduation. Now is the moment of truth. Will your contributions match or exceed the approximate amount required? If the answer is yes, well that is great news. Put the battle plan into place and keep feeding those accounts consistently.
If the answer is no, as it is for many of us, stick to the plan anyway, make the contributions you can and start researching alternate ways to supplement the approximate savings you will have in place. Student loans come in several different varieties. Finding the right student loan to fit your needs and situation can often be a logical solution.
Federal Student Loans are generally affordable, with reasonable interest rates and deferred payments. Depending on your needs and how you qualify a Federal Student Loan, it may fill in the financial gaps in funding the education of your children. For each student, their financial situation and that of their parents is taken into account when they apply for Federal Student Loans. If what you have found in the realm of Federal Student Loans has not yet solved your funding issues, a private student loan might be right for you and your children.
A private student loan can be the perfect option when federal loans and other financial aid options have not come through at all or if they have simply fallen short of the financial demands of college education and living. Applying for a private student loan can be done online and is a fairly simple and quick process. A student with no credit history can still qualify for a private loan with the assistance of a qualified cosigner who has established good credit. When a private loan has been approved, the funds are sent directly to the student.
Planning ahead is great, but when the financial demands of a college education outweigh the best results of your planning, supplementing your education budget through federal or private student loans is a functional and logical Plan B.

About the Author: Evelyn Saunders, a retired teacher, is the editor for student-loans.net, a provider of student loans and information on how to get private student loans as well as consolidation. For more information, please visit http://www.student-loans.net.

Repaying Your Student Loans

You took out the student loan, are going to college and then life changes. So what do you need to know about repaying your student loans? Here is a little information everyone should understand when it comes to federal student loans.

To start, repayment for student loans only occurs after you graduate, leave school, or drop below half-time enrollment. You will then have a short grace period that will be:

* six months for a Federal (FFEL) or Direct Stafford Loan.
* nine months for Federal Perkins Loans

If you have a FFEL or Direct PLUS Loan, you don't have a grace period and repayment generally must begin within 60 days after the loan is fully disbursed.

The upside of FFEL or Direct Loans is that you have a choice of repayment plans. Federal Perkins Loans don't offer this, you generally have up to 10 years to repay, however, your monthly payment will depend on the size of your debt and the length of your repayment period.

If you don't repay your student loans on time or according to the terms of your promissory note, you might go into default, which will affect your credit rating. There is assistance for borrowers having difficulty repaying their education loans, including deferment and forbearance. In certain circumstances, your loan can be discharged/canceled.

One example is if you're a teacher serving in a low-income or subject matter shortage area, it may be possible for you to cancel or defer your student loans.

Just because you go to college and get a degree, doesn’t always mean you’ll have an overabundance of money right away. If you find yourself in financial trouble and have difficulty making your education loan payments, contact the organization that services your loan immediately. Find out if you qualify for a deferment, forbearance, or other form of payment relief. It's important to take action before you are charged late fees. For Federal Perkins Loans, contact your loan servicer or the school that made you the loan. For FFEL Loans, contact the lender or agency that holds your loan.

What is deferment? You can receive a deferment for certain defined periods. A deferment is a temporary suspension of loan payments for specific situations such as reenrollment in school, unemployment, or economic hardship. You don’t have to pay interest on the loan during deferment if you have a subsidized FFEL or Direct Stafford Loan or a Federal Perkins Loan. If you have an unsubsidized FFEL or Direct Stafford Loan, you’re responsible for the interest during deferment. If you don’t pay the interest as it accrues (accumulates), it will be capitalized (added to the loan principal), and the amount you have to pay in the future will be higher.

You have to apply for a deferment to your loan servicer (the organization that handles your loan), and you must continue to make payments until you’ve been notified your deferment has been granted. Otherwise, you could become delinquent or go into default.

For those who are called to active duty during a war or other military operation or national emergency, the new College Cost Reduction and Access Act (CCRAA), enacted on September 27, 2007, modifies the military service deferment for borrowers in the FFEL, Direct Loan and Federal Perkins Loan programs.

This deferment was originally added to the HEA by the Higher Education Reconciliation Act of 2005 (HERA). Under the HERA, the military service deferment had a maximum time limit of three years and was available for loans first disbursed on or after July 1, 2007.

Effective October 1, 2007, the CCRAA eliminated the three-year limit for this deferment and removed the provision that limited the availability of the deferment to loans first disbursed on or after July 1, 2001. Eligible borrowers may now receive the deferment on all outstanding FFEL, Direct Loan and Federal Perkins Loan programs in repayment on October 1, 2007, for all periods of active duty service that include that date or begin on or after that date. A borrower whose deferment eligibility had expired due to the prior three-year limitation and who was still serving on eligible active duty on or after October 1, 2007, may receive the deferment retroactively from the date the prior deferment expired until the end of the borrower’s active duty service.

There are options. If you are concerned about applying for a federal loan due to the need to pay it back, remember there is help out there and people to talk to. Using a student loan for college has more benefits than downfalls, so be sure to do your homework first and then make your decisions.

Evelyn Saunders, a retired teacher, is the editor for student-loans.net, a provider of private student loans and information on student loans and consolidation. For more information, please visit http://www.student-loans.net

Types of Student Loans

If you’re in the market for student loans, you might be overwhelmed and wondering where you should start. The first step is to educate yourself about what types of loans are out there. Student loans are generally needed when financial aid runs out, or if you don’t qualify for financial aid. Compare each type and consider which loan will be best for you and your situation. There are two major categories: private student loans and federal loans.

Federal loans are provided by the government and there are a few different types that you may qualify for. You can get a federal loan directly from the government or from a bank or credit union. When you’re inquiring about these loans, refer to them as Federal Stafford Loans. It may be helpful to go directly to your bank and get some guidance as to which type is best for you. But, you can research this yourself and most likely be able to determine which one best suits your needs. Remember, these federal loans are income based, so check your eligibility before you proceed.

Subsidized Federal Stafford Loans are subsidized by the government. This simply means that the government agrees to pay the interest while you are enrolled in school. They will also pay interest for you if you later in life need to defer your payments. This makes lending you money safer for the banks and credit unions. They know that they are going to make their money. Therefore, because of the bank security, you can reap the benefits of lower interest rates, longer pay-off periods and government subsidy.

Unsubsidized Federal Stafford Loans are not subsidized by the government. Any money borrowed and the interest on that money is totally your responsibility. Interest rates can be very good and terms are geared to accommodate students. For example, payments may be able to be deferred in certain situations. Unsubsidized Federal Stafford Loans are meant for students that don’t qualify for a Subsidized Federal Stafford Loan, or for students who need more money than they can get from financial aid. This loan is not as narrow on incomes that qualify and almost everyone can qualify.

Talk to the financial aid department at your school. Your parents could qualify for a Federal Plus Loan to help pay for your college. If your income is very low, then you may qualify for a Federal Perkins Loan. If you don’t qualify for any type of federal loan, then you may consider private student loans.

Private student loans generally have an easier application process and offer special interest rates and terms to students as well. Private student loans are available to students and their parents. Private student loans can be obtained very quickly, usually within a few days. These loans are credit based and don’t rely so heavily on income guidelines. If you don’t qualify for student grants, financial aid, or if you just aren’t receiving as much as you need, then consider private student loans to help you pay for school.

About the Author: Evelyn Saunders, a retired teacher, is the editor for student-loans.net, a provider of student loans and information on how to get private student loans as well as consolidation. For more information, please visit http://www.student-loans.net.