Student Loans – Where to Start?

There are a lot of things to think about when it comes to student loans. If you are feeling unprepared or maybe just under-prepared you are not alone. With the costs of college tuition continuing to rise more and more families are finding themselves not quite as ready as they hoped.

Often times the decision of where to go to college is made well before the conversation about how to pay for college is even brought up. That can work sure, but at what cost? Paying for college is an important conversation for many reasons. One reason being, how long will the debt be with your student. Many college students come out of college with a debt load so high that they find it challenging to buy a reliable car to get them to that first job in their field of choice, let alone pay for housing or save for the purchase of their first home.

Where to start?

Who’s Paying?

Who’s paying the bill? If mom, dad, grandma, grandpa, etc. are planning to help that is great.  Finding out how much of that financial support is going to come from them would be a next great question.  If they cannot help pay the bill can they help with borrowing funds? Some student loan options do not require a cosigner on the loan and others do so knowing who to ask when and if the need arrives is helpful. That way a scramble at the last minute before class starts can be avoided.

Scholarships and Grants

Scholarships and Grants are something to seek out and apply for, large or small they are a great way to help reduce the amount of funds that need to be borrowed.

Job and School

Can a job and school work together? Being able to work and pay for some expenses or classes with earned funds rather than borrowed funds can help limit the amount of student loan debt. Using your student loan funds to fund your education and all of your living expenses is an option for some but it can also be very costly in the long run and can really add up quick.

Federal or Private Student Loans

When the time comes to start talking student loans there are two main options. Federal or Private student loans. Federal student loan options should be used first. As these loans are a little easier to be approved for and also have student friendly repayment options. They do however have annual and lifetime limits making it difficult to solely fund college with federal student loans. Private student loans require qualifications of credit and income based on the lenders requirements. Typically private student loans require a cosigner because most college students do not have the credit history or income that a lender wants for reassurance the loan will be repaid.  That means the student loan when approved does report to the student and the cosigners credit history and debt obligations.

It really is never too early to start talking about financing a college education. Having that conversation early may help your student filter through the many options available for them as they look to further their education and choose a career. It may also empower them for after college because they were able to limit the debt they have when school is all over and they are ready to settle into their future.