"Hey Dad!", my son screamed from our front door, "I did it, I
was accepted to Boston University.". My momentary exhilaration
was overshadowed by the financial realities of college,
especially private college. A quick calculation of my costs for
4 years of tuition, and expenses came to roughly $250,000, a
very intimidating figure. Overwhelmed I thought, how could I
possibly afford to send him to college? Fortunately, there are
various options available to finance this academic endeavor.
Federal programs are the single, largest source of school loan
consolidation. The first step in applying for this type of aid
is going on the Free Application for Federal Student Aid (FAFSA)
website, at http://www.fafsa.ed.gov/, and fill out a
comprehensive questionnaire. It generally takes around 7 days to
process, at which point you will receive a Data Release Number,
and Estimated Financial Contribution. It is important to find
out if the school you will be attending participates in the
federal student aid programs, most do.
There are several federal programs available for student aid,
assuming school participation. The Federal Stafford Loans, are
available to both undergraduate and graduate students.
First-year undergraduates are eligible for loans up to $2,625.
Amounts increase for subsequent years of study, with higher
amounts for graduate students. The interest rate is variable,
but never exceeds 8.25 percent. The Federal PLUS Loans are
unsubsidized loans made to parents; the interest rate is
variable, but never exceeds 9 percent. Federal Work Study
provides jobs to undergraduate and graduate students, allowing
them to earn money to pay education expenses. These are the
major federal sources of loan money for college.
Private education loans are also available from a variety of
sources to provide supplemental funding when other financial aid
does not cover costs. These loans are not sponsored by
government agencies, and are offered by banks or other financial
institutions. Sallie Mae is a unique loan that consists of a
comprehensive package of both private and federal loans.
After accumulating 4 years of undergraduate education loans, it
is best to consider a School Loan Consolidation Program. Very
simply, you can elect to combine all your outstanding loans into
one student consolidated loan, which may create more favorable
terms and simplify repayment, benefiting both the borrower, and
the lending agency. Major benefits include the convenience of
lower monthly payments, a single fixed rate, and one payment per
month. There is a minor downside, however, students who do not
consolidate their Stafford loans will have a 6-month grace
period after graduation to begin making payments. Students who
consolidate must begin making payments within 60 days of their
consolidation. Both parents and students are eligible to
consolidate student loans. The school loan consolidation program
streamlines repayment by eliminating different terms, repayment
schedules, and lenders.
Will I be able to afford my son's college education? Careful
financial planning, and research should make this endeavor a
reality. While it is true that college tuitions continue to
rise, there is more financial aid available to compensate for
the increases. Ultimately, a good education is your best
investment.
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