Navigating the maze of student loans

man studyingWhen my first child applied for financial aid, we eagerly awaited our financial aid packet. The financial aid office at several schools, anticipated that we would qualify for need-based money simply because we were a family of eight that included 6 children. When we did not qualify for need-based money and our second child was applying, I was hopeful. What I thought was going to be “free” money, ended up being a repeat of the previous year. A list of what type of loans we would qualify for and sadly, no need-based funds. My need-based funds totaled zero, but the unsubsidized and subsidized student loan amounts were quoted in our financial aid packet. Learning what unsubsidized and subsidized loans was the first step we needed to take. Financial aid advisors and other parents quickly became our friends. Additionally, the internet became an active resource in the loan selection process. Once the terminology was learned, figuring out what we needed to borrow along with the amount our student could borrow became be factors into our financial equation. Overwhelming at first, it didn’t take long to figure out how much we were going to spend over the next four years.

The first year you are in constant communication with the financial aid office. We were constantly asking questions, gathering data, and exploring the internet. Our financial aid packet included a list of lenders that had an affiliation with the school. It also gave suggestions of using home equity loans (tax deductible) and some form of tuition payment system. We had to decide which method(s) we were going to use. After we decided how to pay the loan back, then we could select our loan and begin the dreaded process. We selected our first Parent PLUS loan based on the loan company that the college was affiliated with. It was already established, it was a bank that was known and it was recommended by the college. By the time we had to renew it the next year, we did some extra homework. We began to check other reputable bank web pages. Checking interest rates was a good starting point and some companies would offer a reduction in the interest rate if you had automatic payment deductions. Another aspect of the Parent PLUS loans included the option of paying on the loan immediately or deferring payment. Either way, these are early decisions that need to be made. Lastly, when searching for other methods to pay for college, exploring other non-traditional companies such as travel companies and college marketing services can be a resource. Their benefits can be an attractive option, such as interest rate reductions or rebates. Going through the college selection loan process is very similar to selecting a mortgage company. You gather your information, compare the loan specifications and decide which loan will work for you. Considering everything is always an option, the hardest part is jumping into unchartered waters.

 

Miscellaneous Financial Aid Topics