How to Pay for College This Fall

With the fall 2023 semester just weeks away, now is a great time for students and their families to think about how to pay for college. If you don’t have the savings to pay for college up front, there are several ways to cover school expenses. But with the cost of college continuing to rise and interest rates at higher levels than in recent years, it’s important to carefully consider different funding options.

You can now easily explore your personal student loan options.

How to Pay for College This Fall

Some common ways to pay for college include:

Federal student loans

College students can apply for student loans with fixed interest rates from the federal government. These include direct subsidized loans and direct unsubsidized loans, with the former having lower interest rates for students with specific financial needs.

“Typically, federal student loans offer lower interest rates than private loans. Because these loans have terms of 10 to 30 years, lower interest rates can lead to significant savings over the life of the loan,” said attorney Omar Ochoa, founder of the Ochoa Law Firm.

Also, he said, Federal student loans There are usually favorable loan repayment and forgiveness options. Yet “as generous as some loan repayment and forgiveness options are, there are eligibility restrictions that can make a person’s head spin trying to navigate them.”

The annual total debt limit for federal student loans is $57,500 for undergrads, although schools set specific amounts you can borrow.

Private Student Loans

Another way to pay for college is to cash out Private student loans.

Although federal student loans may not have some benefits, such as the possibility of federal loan forgiveness, sometimes Private student loans A funding gap is required to cover.

“Private student loans typically have higher borrowing limits, providing more funds to cover the cost of education. Private loans also typically have lower limits and are easier to obtain than federal student loans,” Ochoa says.

That said, private student loans may have certain limits or at least higher rates if you have them bad credit.

“If you don’t meet the minimum credit score set by the lender, private student loan interest rates can be higher than federal loans,” says Graham Ortman, a senior financial analyst at Pick6 and a certified public accountant with financial literacy apps. jogo

Sometimes, however, private student loans offer lower interest rates than federal student loans for certain borrowers, especially those with good credit. So, it makes sense to compare the cost of borrowing through federal student loans versus private student loans.

See what private student loan rates you may qualify for right now here.

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Grants can provide free money to students to help pay for college, usually based on financial need.

Pell Grants, for example, are federal funds that do not have to be repaid. Students can apply for Pell Grants by submitting a Free Application for Federal Student Aid (FAFSA). The maximum Pell grant amount for 2023-2024 is $7,395 Students may also receive grants from other sources such as state governments or non-profit organizations.

“It’s free money that you don’t have to pay back, which is not only convenient now but will also help you save money in the long run by avoiding or reducing the required payments, including interest, on the loan,” says Ortman.

So, whenever possible, take grants and scholarships first, he says.

scholarship

Scholarships are similar to grants, in that the funds are not required to be repaid, but eligibility may extend beyond financial need. Colleges themselves may offer scholarships, as may other organizations such as companies and foundations.

Look online for scholarship opportunities to increase the amount of free money you can pay for college.

“You may have certain requirements to earn and retain grants and scholarships, such as participating in a certain academic program or maintaining a certain GPA, but making the effort to meet these requirements will save you a lot of money down the road,” says Ochoa.

Remember that while grants and scholarships can help reduce borrowing needs and are usually the preferred primary route, you can also look at student loans at the same time so you’re prepared.

“Applying and qualifying for a federal student loan doesn’t mean you have to accept it. And even if loan funds are actually disbursed to you, if you find out you’re getting one, you’ll usually get that money back without interest or penalties. can give. More grants or scholarship funds than you expect,” Ochoa said.

Applying for a private student loan May not be flexible enough, but it can be helpful to compare rates ahead of time to get a better idea of ​​what will work best for you. If you know you’ll need a certain amount of financing to cover a shortfall after grants, scholarships and/or federal student loans, being prepared can help you get the best deal without making costly decisions. Learn more here now.