(StatePoint) More American families are borrowing for college. At the same time, merit-based support and the use of personal income and savings decline.
This is according to an annual report College Avenue Student Loans survey of college students at four-year universities, conducted with Barnes & Noble College Insights. The survey also revealed that college affordability is a priority for the majority of students (57%). Despite financial concerns, 81% of students say a college degree is crucial for their future.
“The mix of methods families use to pay for college has changed, but one thing remains constant: students and families appreciate the investment in higher education,” says Angela Colatriano, chief marketing officer of College Ave.
To borrow smart for college this fall, consider these tips and information:
Full Options Exhaust
Before turning to private student loans, exhaust other sources of financial aid first. Complete and submit the Free Application for Federal Student Aid Consider for grants, scholarships, work-study programs, and federal student loans. If your selected school is one of the 400 institutions that require the CSS profile, submit this too for institutional support. Finally, look for private scholarships offered by companies and nonprofits. One of them is easy to apply. College Ave Monthly $1,000 Scholarship Contest.
If you need to borrow, look first to federal student loans in the name of the student, which generally offer the lowest rates and come with additional benefits. They are not dependent on credit scores and offer longer deferrals and forbearances, income-driven repayment plans, and student loan forgiveness.
Private student loans
Federal student loans have annual and aggregate loan limits. If you need to borrow from parental or private loans to cover the remaining costs, consider these factors:
Costs: Compare the costs of different loans by looking at the actual interest rate you’ll be charged, not the lowest advertised rate. Understand the difference between variable and fixed interest rates, and be aware of available fees and discounts, such as those offered for using autopay.
Co-signers: A creditworthy co-signer not only increases the chances of loan approval, even though the student may qualify on their own, co-signing can generate a lower interest rate, which lowers the overall cost of the loan.
Total debt: Borrow only what you need. With private loans, you can usually borrow up to the full cost of participation. However, borrowing less than the maximum can help you save over time. A simple rule of thumb you can use to determine how much student loan debt you can afford: if your total student loan debt at the end of your studies, including federal and private loans, is lower at the student’s annual starting salary, you can probably pay off the loans in 10 years. years or less.
Refund: Look for repayment flexibility that suits your needs. For example, College Ave student loans offer repayment options over 5, 8, 10, and 15 years, as well as the choice to defer payments until you finish your studies or start payments immediately. Whichever option you select, understand the terms.
Private college loans can play an important role in financing your education. By researching your financial aid options, applying for scholarships, and comparing private student loan options, you can minimize college costs, so you can better manage your finances after graduation.