College:  Student Financial Sources

College: Student Financial Sources

At $35,359, the average student loan balance per borrower also represented a record high in 2018. That’s up slightly from $34,144 in 2017, according to Experian data.

Published Monday, June 8, 2020 12:00 pm

At $35,359, the average student loan balance per borrower also represented a record high in 2018. That’s up slightly from $34,144 in 2017, according to Experian data.

If you’re a student facing the task of applying for financial aid, or a parent who needs assistance with the skyrocketing costs of your child’s education, you’re going to want to do your homework when it comes to seeking out and securing enough money to pay for college.

In a perfect world, a college savings plan would have been initiated years ago that, with regular contributions and earned interest, would have grown significantly enough to cover most or all of the cost of a higher education. Any extra expenses would be paid with scholarships, grants, money saved from summer jobs, or dad’s checkbook. But let’s face it, how many people live in that perfect world? Not the majority.

For those who don’t have the luxury of a huge college savings account or enough family wealth to simply write a check for four or more years of college, there are other options.

The first step is to look for sources that offer free money. That’s the best kind because it doesn’t have to be paid back. Free money comes in the form of scholarships and grants. The Internet is a great place to search for these opportunities, but also check with local companies, churches and clubs or organizations to which you or your family members belong. While some offerings might seem less than meager, keep in mind that they add up. Even small scholarships and grants can help with those extra expenses such as books and supplies, living expenses, and additional equipment or class fees. In the long run, every little bit that you don’t have to borrow means you’ll be paying less back at the end of your college career.

Once you’ve exhausted all options for free money, it’s time to fill out the Free Application for Federal Student Aid (FAFSA). This form is what determines your eligibility for federal aid. Assistance can come in the form of federal grants, scholarships, work-study programs, and student loans. Even with help from the government, the best place to start is with the first three free-money options listed. Student loans are also very helpful but they do need to be paid back eventually.

When it comes to student loans, there are two types from which to choose. Federal student loans are funded by the government and offer lower fixed interest rates as well as more flexible repayment options. Private student loans, on the other hand, are obtained through banks and other financial institutions. They typically have higher interest rates, and those rates are usually variable so as they increase, the amount you have to pay back also increases. Private loans also provide fewer options when it comes to paying the money back. In addition, prepayment penalties and fees may apply.

From whomever you borrow money for college, be sure to borrow the least amount possible. That way, when you graduate, you can focus on the excitement of starting a new career instead of worrying about how you’re going to get out of debt.

For more information on student loans and other financial aid, click on the links below.



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