Different Ways to Pay for College

July 26th, 2021 by

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Are you or your children looking for different ways to pay for a college education? Fortunately, there are several ways you can pay for a college education these days, according to the Consumer Financial Protection Bureau. 

Before considering taking out a student loan, be sure to look into the many options available to you. 

Military Service members, veterans, and their families may be eligible to receive GI Bill benefits or military tuition assistance. 

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You should also seek out scholarships and grants as well. Grants and scholarships are often types of financial aid that do not have to be paid back. 

What is the difference is between a grant and a scholarship? 

Grants are often need-based, whereas scholarships are usually merit-based. You should seek out scholarships and state and local grants asking for information from the financial aid office on your school campus. Deadlines are strict; be sure to adhere to them!

Before you apply for a private student loan you should exhaust all scholarships, grants, and federal student loans. 

What is the difference between a federal and private student loan? 

There are many differences, however, the important differences between federal student loans and private student loans are:

  • In some cases, the federal government will pay the interest on your federal student loan while you are in school. 
  • The interest rate for a federal student loan is for the most part is fixed, meaning the interest rate on your loan will remain the same throughout the entire life of the loan. 
  • You can also enroll in a repayment plan based on your income. This limits the amount you must repay each month based on your income.  
  • Your federal student loan may be forgiven after 10 years of working in public service.  
  • You must complete the Free Application for Federal Student Aid (FAFSA) to be eligible for and federal student loans and work-study or grants.

If you have exhausted all other options, then it may be time to consider taking out a private student loan. This however should be the last option on your list. 

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Here are some points about private loans:

  • Private student loans are not very flexible, on the terms of repayment or protections compared to federal student loans. 
  • Private student loans are funded by banks, credit unions, state loan programs, and other types of lenders and are subject to their rules and regulations. 
  • They are not funded or subsidized by the federal government. 
  • They generally also carry a variable interest rate, which can reset every month or quarter, causing your monthly payment to change.

With all the financial aid available, be sure to choose the right one for you.

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