Getting a higher education can drastically increase your income throughout your lifetime -- in fact, many people estimate that it can be $1 million or more! Investing in your future is one of the best decisions that you can possibly make. Funding this can be a challenge, but myriad methods exist to minimize or even eliminate the cost of college.
The federal government is the biggest provider of financial aid within the United States, but it can also come from state governments, private organizations, and the higher educational institutions themselves.
Going to college is often a valuable investment for your future but requires some planning before you ever set foot on campus. There are many costs associated with attending a higher education institution, including books, room and board, transportation, and a wide array of other, miscellaneous expenses. To prepare for this lengthy and sometimes complex process, you should first learn about the different ways you can pay for your education and how to do so responsibly.
If your loan is subsidized, you will not be responsible for making any payments until after you graduate. Interest rates should be typically at or below 6.8 percent. The government pays your interest for you while you are in school. The maximum annual amount of subsidized loans depends on your year in school. You cannot accrue more than $23,000 in subsidized Stafford loans throughout your undergraduate studies.
If you have an unsubsidized Stafford loan, you are responsible for paying all the interest. Interest builds up at a fixed rate of 4.66 percent while you are in school, but payments are typically deferred or postponed until after you graduate. All students are eligible for this type of loan.
More desirable than Stafford loans and have more stringent eligibility rules. They have a fixed interest rate of 5 percent. They are all subsidized, so the government pays any interest accrued while you are in school and for a short period after you graduate. Because of their favorable terms, Perkins loans are reserved for students who show exceptional financial need. These loans are funded by the government, but disbursed by each individual college or university. As with Stafford loans, students can only borrow a certain amount through Perkins loans.
Grants and scholarships, unlike loans, do not need to be repaid. Grants are typically offered through the government or institution, while scholarships are often provided through individual, private organizations. You must file the Free Application for Federal Student Aid (FAFSA) to apply for many types of financial aid, and you should consult with counselors, financial aid officers, and scholarship websites before deciding where to go.
Private banks may -- if they believe that you and/or your cosigners are reliable borrowers -- lend you the money to help cover the cost of college. Eligibility therefore often depends upon your credit score and the loans almost always have a higher interest rate than government loans. You should always exhaust all other options before signing onto a high-cost private loan.