Scrambling for Financial Aid? Avoid These Common Mistakes
BOSTON, Aug. 15 /PRNewswire/ -- Tuition costs are skyrocketing,interest rates are rising and there's one month until the 2006-2007academic year. College students and parents are scrambling to find loansthat best fill the "gap" -- the amount of money needed for college costsnot covered through financial aid and personal savings.
Shockingly, thesize of the gap is projected to reach $35.7 billion this year. "'Back to School' means more than dorm furniture and supplies -- itincludes determining the best way to pay for college," said Kevin Walker,co-founder and CEO of SimpleTuition, Inc.
(http://www.simpletuitiondotcom), acompany helping parents and students easily compare education financingchoices. "As students and parents determine how to best finance remainingcosts, many do so with little time or knowledge on how to find and comparethe loans to best fit their needs."
Parents report feeling overwhelmed with the amount of information onfinancing options. Loans come with different terms and benefits, andborrowers find it difficult to compare on an 'apples-to-apples' basis. Withthe clock ticking, students and parents to rush into loan decisions, whichleads to mistakes and "buyer's remorse".
With the average undergraduate student loan debt approaching $19,000,most families can no longer cover their costs with just one loan (likemortgages or car loans) and, thanks to limits on federal loans, often endup with three to four loans each year. By graduation, students have upwardsof 10 different loans.
A few things to remember when reviewing college loan options:
Get Creative About Sources for Direct Payment
Even if you've been saving since your child was an infant, it isusually not enough to cover the costs of four years of college -- afrustrating realization for many.
But you may be surprised to findadditional resources -- think about the savings by having a child away fromhome and revisit assumptions about college-related expenses (used books,off-campus living).
Even a thousand dollars in now can save substantiallylater. Remember: All Loans Are Not Presented Equally Each loan comes with different options including fees, repaymentlengths, total loan amount, consolidation options, credit requirements andeligibility, and lenders promote each differently in a quest to get yourattention. Be sure to review all the terms and benefits to ensure you'rechoosing the best loan for the long haul.
Avoid Buyer's Remorse:
Start Early Many parents put off decisions until the last minute. Then, in a panic,they rush and pick the lender that their friend used, go with a big brandor local bank, charge their credit cards, dip into their 401(k) and eventake out home equity loans. Start early and be diligent in researchingloans from multiple sources.
Evaluate Financing Options Carefully Optimize lower-cost loans (Stafford and Perkins) before adding privateloans, which tend to cost more. Remember the "four year cost" of borrowing,choices made for freshman year are likely to be a reality in subsequentyears. A rule of thumb: multiply freshman year borrowing by five for theaggregated impact of college borrowing.
Balance the borrowing betweenparent and student. Parents may be reluctant to add to their debt, but evena small amount of additional borrowing can save the future graduatesubstantially.
Source: http://www.prnewswire.com/cgi-bin/stories.pl?ACCT=104&STORY=/www/story/08-15-2006/0004416144&EDATE
Shockingly, thesize of the gap is projected to reach $35.7 billion this year. "'Back to School' means more than dorm furniture and supplies -- itincludes determining the best way to pay for college," said Kevin Walker,co-founder and CEO of SimpleTuition, Inc.
(http://www.simpletuitiondotcom), acompany helping parents and students easily compare education financingchoices. "As students and parents determine how to best finance remainingcosts, many do so with little time or knowledge on how to find and comparethe loans to best fit their needs."
Parents report feeling overwhelmed with the amount of information onfinancing options. Loans come with different terms and benefits, andborrowers find it difficult to compare on an 'apples-to-apples' basis. Withthe clock ticking, students and parents to rush into loan decisions, whichleads to mistakes and "buyer's remorse".
With the average undergraduate student loan debt approaching $19,000,most families can no longer cover their costs with just one loan (likemortgages or car loans) and, thanks to limits on federal loans, often endup with three to four loans each year. By graduation, students have upwardsof 10 different loans.
A few things to remember when reviewing college loan options:
Get Creative About Sources for Direct Payment
Even if you've been saving since your child was an infant, it isusually not enough to cover the costs of four years of college -- afrustrating realization for many.
But you may be surprised to findadditional resources -- think about the savings by having a child away fromhome and revisit assumptions about college-related expenses (used books,off-campus living).
Even a thousand dollars in now can save substantiallylater. Remember: All Loans Are Not Presented Equally Each loan comes with different options including fees, repaymentlengths, total loan amount, consolidation options, credit requirements andeligibility, and lenders promote each differently in a quest to get yourattention. Be sure to review all the terms and benefits to ensure you'rechoosing the best loan for the long haul.
Avoid Buyer's Remorse:
Start Early Many parents put off decisions until the last minute. Then, in a panic,they rush and pick the lender that their friend used, go with a big brandor local bank, charge their credit cards, dip into their 401(k) and eventake out home equity loans. Start early and be diligent in researchingloans from multiple sources.
Evaluate Financing Options Carefully Optimize lower-cost loans (Stafford and Perkins) before adding privateloans, which tend to cost more. Remember the "four year cost" of borrowing,choices made for freshman year are likely to be a reality in subsequentyears. A rule of thumb: multiply freshman year borrowing by five for theaggregated impact of college borrowing.
Balance the borrowing betweenparent and student. Parents may be reluctant to add to their debt, but evena small amount of additional borrowing can save the future graduatesubstantially.
Source: http://www.prnewswire.com/cgi-bin/stories.pl?ACCT=104&STORY=/www/story/08-15-2006/0004416144&EDATE
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