College 101
Saving for College
College planning can be stressful and confusing. One thing is certain, you'll be better off if you start saving now, no matter how old your child is.
Saving for College
Grants and Scholarships
Federal and state governments, colleges, and private third-parties offer grants and scholarships to help pay for college. Unlike other parts of the financial aid package, grants and scholarships are free money, they don’t have to be repaid like loans or earned such as a work-study award.
Grants and Scholarships
Federal Student Loans
A federal student loan is a loan funded by the federal government to help pay for your education. It is borrowed money you must repay with interest.
Federal Loans
Private Student Loans
If there is a gap between expected costs and the available resources, then it may be time to consider private student loan options.
Private Loans
Managing Student Loan Debt
According to the Federal Reserve, student loans total more than $1.3 trillion in the U.S. That's second only to the size of the nation's mortgage debt. Developing a plan to manage your student loans is critical to your long-term financial health.
Repaying Student Loans
Whether you’re attending college soon, are a current student, or already have student loans, these short, interactive learning modules from USSFCU's Best Life Learning Center can help you make the best decisions.
Start Learning
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Additional Learning Resources
Studentaid.gov The Department of Education's site for free information on funding education beyond high school.
Collegeparents.org A resource for the millions of parents of current and future students.
Mycollegecorner.com Relevant information, tools, and personal admission and financial aid assistance.
FTC.gov Information on choosing a college and avoiding scholarship and financial aid scams.
Consumerfinance.gov Compare financial aid offers and college costs and understand student loan repayment options.
TISLA.org Free, neutral, and clear student loan advice and dispute resolution assistance.
Student Loan Glossary
Getting a handle on the central concepts of student loans as early as possible can help with borrowing choices now and the repayment process down the road. Here are some general concepts you should understand:
FAFSA
The Free Application for Federal Student Aid, or FAFSA, is a government form that students (or their parents) must complete to be eligible for government-provided benefits—things like state grants, work-study funds, and federal student loans.
Principal and Interest Rate
When taking out loans, there are two primary elements—the principal and the interest. The principal is the amount you borrow and will need to pay back. The interest is what the lender is charging you for the loan. Interest is calculated as a percent of the principal. The interest rate on a federal student loan is set by Congress through legislation, while the interest rate on a private student loan is set by your lender and can be affected by a variety of things, such as your credit history, whether you have a cosigner, the type of loan and the length of repayment, as well as other factors. Generally, loans with lower interest rates will cost you less over the course of your repayment term than those with higher interest rates.
Federal Student Loans
Federal student loans are funded by the government and offer several flexible consumer benefits that make them the go-to option for a majority of student borrowers. Federal student loans tend to offer greater repayment flexibility than private loans. For example, you may be able to delay payment up to 12 months in the event of economic hardship, as well as modify your monthly payment amount to better suit your income level. When taking out a federal or private student loan, you can generally postpone repayment until after graduation.
Private Student Loans
Private student loans are offered by private lenders, such as banks or schools. Generally, these loans don’t include as many financial benefits and protections as federal student loans. With private loans, you may be required to apply with a co-signer, and you may face variable or higher interest rates based upon your creditworthiness. When it comes time to repay your loans, you may have fewer options to delay or decrease your monthly payments. While private student loans may appear to be a less attractive option than federal student loans, they can help borrowers fill the financial gap between what the government has lent you and the total you need to cover the cost of attendance.
Subsidized vs. Unsubsidized Loans
Federal student loans generally fall into one of two categories: subsidized or unsubsidized. Subsidized loans are limited to students who demonstrate financial need. If you qualify for this type of loan, the government pays the interest while you attend school and, in some cases, for six months after you graduate (known as the “grace period”), as well as during a deferment period. Unsubsidized loans, on the other hand, are more widely available but do not offer this benefit. While you won’t have to start making payments on an unsubsidized loan until after school, the interest that builds up while you attend will be added to your principal for you to repay later on.
Perkins Loan
The Federal Perkins Loan Program also referred to as a Perkins Loan, is a student loan program offered to students with exceptional financial need. Your school acts as the lender, the funds are limited, and not all schools offer them. You should contact your school’s financial aid office as early as possible to confirm availability. Perkins loans have a fixed interest rate of 5 percent.
PLUS Loans
Federal PLUS loans are available to graduate students and parents of dependent undergraduate students. The Department of Education acts as a lender, and your ability to borrow will depend on your credit history, as well as your eligibility for federal student aid. These loans are often paid directly to the school to cover expenses like tuition and room and board; if there is money left over, it will be given to you. The maximum loan amount is the cost of attendance minus any other financial aid received. Repayment on these loans kicks in as soon as they are disbursed, but they can generally be deferred as long as the student is enrolled at least half-time and for six months after that.
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