Financing a college education can open the door to many options and also many questions. As your high school student approaches college-age, you’ll start to receive plenty of student loan information. You will see options for federal loans for college as well as private college loans, and the decisions you make will affect the amount your child has to repay after graduation. To set your child up for future financial success, you have to understand your financing options.
Federal loans for college
The most well-known and popular option for financing a college education is federal direct student loans. Federal loans are issued directly by the government through the U.S. Department of Education. The terms of federal loans are set by the government.
To qualify for federal student aid, you have to fill out the FAFSA (Free Application for Student Aid) and submit it by the deadline. This application will outline your family’s expected contribution to your child’s education costs, as well as how much you may receive via grants, loans and work-study money.
Private college loans
As you research federal loans for college, you may find you need additional funding to cover the costs of tuition, books, housing, and other essentials. If this is the case, you may want to look into private college loans.
Private college loans are offered by banks and lending institutions. Similar to federal loans, they typically require that you be enrolled at least part-time for approval, and disbursements are sent directly to your learning institution. They differ from federal student loans for college in a couple ways: Private loans are based on credit ratings, and the terms and conditions are set by the bank, not the government.
When you are looking for a private loan, you should have some idea of how much you will need to borrow. A student loan calculator can help you determine this figure for your current year. You can then compare fixed rate and variable rate options for a particular loan, and educate yourself on the differences in repayment terms and associated fees to find what works best for you.
Put student loan information to work for you
The more student loan information you gather before your student applies for college, the better equipped you will be to make smart borrowing decisions. Remember to check out both federal and private lending options to see what works best for you. When used responsibly and with a trusted lender, private college loans can be a great way to get the financing you need and build up your child’s credit score. Your child’s education is critical to his or her future and worth the investment.
Sponsored content was created and provided by RBS Citizens Financial Group.