Ninety percent of students who receive loans choose their lender based on their school's recommendations.
In light of the recent controversy regarding unsavory practices between university financial aid offices and the banks hawking student loan programs, now more than ever it's important for families to know what they're agreeing to.
Joan Jensen, president and CEO of the Central Credit Union of Illinois showed ABC7 smart ways to pay for college and how to find that quality lender.
First Things First Before committing to any loan or lender first explore the avenues that lower the tuition costs including:
Grants - Pell Grants and Federal Supplemental Educational Opportunity Grants (FSEOGs) are administered directly from the school. They can help offset tuition costs and best of all they do not have to be repaid. These grant awards are based on a student's financial need.
Merit Awards - Scholarships are typically offered to students who possess a specific skill or talent the school is seeking, such as art, music, or academics. Generally, these awards are not based on financial need, and like grants, they do not have to be repaid.
Work-Study - The Federal Work-Study program provides jobs for undergraduate and graduate students with financial need; allowing them to earn money to help pay for education expenses. The program encourages community service work and work related to a student's course of study usually with private nonprofit organizations or a public agency. Information on each the programs above can be obtained through the schools financial aid office or by visiting http://studentaid.ed.gov
Start with Uncle Sam - Capitalize on the low-rate federal loan options.
Federal Perkins Loans - This low-interest (5%) loan, which is mostly funded by the government, is available to both undergraduate and graduate students with financial need. Loan repayments are made directly to the school and don't begin until after graduation.
Stafford Loans - These are variable-rate loans. The government pays the interest on subsidized Stafford loans (need-based) while interest on unsubsidized Stafford Loans accrues over the life of the loan and is the responsibility of the borrower. Repayment of both loans can be delayed till graduation.
Plus Loans - These are loans available to parents paying for their child's education. Similar to Stafford Loans, there are FFEL PLUS Loans and Direct PLUS Loans. PLUS Loans are unsubsidized.
Request the school's "preferred lender" list - Consider the options and ask questions.
This is a list of preferred lenders the school feels can provide reliable products and services. However, be aware that according to New York Attorney General, Andrew Como, some lenders made the lists because they paid a school a percentage of the loan value or provided trips for financial aid officers.
Ask the financial aid office if anyone associated with the school is reaping any financial benefit from any of the lenders included on its list.
Shop Around.
Don't limit your search for lenders to only those organizations suggested by a college.
Talk to family and friends who have been through the process and tap their experience.
Make an appointment to sit and speak with a representative at your credit union or bank to see if refinancing a mortgage or opening a home equity line of credit might be an appropriate option for filling in any gaps.
Shop, Shop, Shop. Leave yourself with plenty of time to thoroughly explore all the grant, scholarship and loan options before making any decisions.Labels: financial aid, free education, high school, scholarship, student loans |
