Choosing The Right Student Loan
(NewsUSA) - Before venturing out on the college financial adventure, find out what loans are right for you or your child.
Financing a higher education is an investment that will pay a lifetime of dividends. It is important, however, to be sure your up to speed on the many choices you have on how to pay for college. After all, you do not want to end up borrowing more than you have to.
Sallie Mae advises students and families to follow its "1-2-3 approach" to paying for college:
1. Find free money first. The first step families should take is saving for college via tax-advantaged 529 savings plans (such as those
administered by Upromise: www.Upromise.com). If savings are not enough to pay the full price of a college or university degree, families may consider using interest-free tuition payment plans (such as www.TuitionPay.com) to spread out payments.
Most importantly, they should also apply for financial aid that does not have to be repaid, such as scholarships and grants. Sallie Mae's award-winning Web site, www.CollegeAnswer.com, hosts the largest, online scholarship database with information about 2.8 million scholarships worth about $16 billion.
2. Explore federal student loans. Consider borrowing under the federally subsidized student loan programs, which provide consumer-friendly loan rates, benefits, and repayment options for students and parents. Parents and graduate/professional students can borrow up to the cost of attendance under the Parent PLUS and Graduate PLUS programs, respectively.
3. Use private student loans to fill any remaining funding gap. Private loans are designed to supplement federal loan programs and are available from schools, banks and education loan organizations. The terms of these loans vary based on the lender and the credit history. Securing a credit-worthy co-signer can significantly reduce your interest rate.
"Students and parents should first check with the financial aid office on campus for recommendations on student loan providers," says Martha Holler, spokesperson for Sallie Mae, the nation's leading saving- and paying-for-college company. "Be sure to borrow wisely. Every dollar that you do not borrow is one that does not have to be repaid."
Students and families can visit www.SallieMae.com to learn more about the many college financing options. In addition, Sallie Mae has underwritten a new video, "Borrow Smart," on paying for college. The video,written by and featuring experts from Kiplinger's Personal Finance magazine, is available at www.SallieMae.com/Kiplinger.