Personal Finance and Investing

College financial aid for students attending college and graduate school can come from several sources, including scholarship, grants, federal loans and private loans. It can become a complicated labyrinth that isn’t always easy to navigate.

Most college planners urge students to tap out on federal funding before turning to other sources, because financial loans tend to be less expensive in the long run. Unfortunately, because college tuition is so high today—and expected to continue to increase—federal loans many times only pay for a portion of college costs.

And while scholarship and grant money are available, the number of students who attend college on a full scholarship are few and far between. The smart thing to do when planning to pay for college if you don’t have a huge college fund at your disposal (most people don’t) is to apply for federal loans. Here’s why: Federal student loans often have an interest rate that is far lower than private financial institutions, and also offer better and longer payment terms.

Usually, students don’t have to start repaying the loan until after graduation, and sometimes can even defer payment of an original loan if the student goes back to school for additional training.

These federal loans don’t pay for everything. The most a four-year student can borrow is $10,500 per year, which for some colleges is just a bite out of a much bigger pie. For graduate programs, the loans can go up to $20,500. What any particular student receives is dependent on several factors, including the college of choice and in which year the student is.

Students can choose from three federal loan programs:

—Stafford loans are available to students in two forms: for low-income students, who don’t have to provide credit references, and for other students, who do.

—Plus loans are low-interest loans taken out by parents to help pay the difference between real college costs and the amount of the student loan. Still, even with this loan tuition costs often exceed what the loans cover.

—Consolidation loans allow parents and students to consolidate multiple loans into a single loan with one monthly payment.

When students apply for a federal student loan, they fill out a Free Application for Federal Student Aid (FAFSA), which automatically includes their information for other programs, including scholarships, grants, or work programs provided by the federal and local governments.

Because financial loans are covering less and less a percentage of college tuition, private financial loans are becoming more popular. Unfortunately, as with any private loan, only those with the best credit scores will receive the best rates. Private loans can be expensive and most college planners urge parents to exhaust other financing methods first.

The best private loans have rates competitive with the federal low-interest rates, about LIBOR +/- 2.0. Watch for lenders that offer a low rate while the student is in school, then raise the rate when payments are due.

As with anything, shop around, do your research, and perhaps paying for college won’t be such a nightmare.

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Get good grades, go to college, and get a good job. It was so simple then. Those days seem to be quickly escaping if they aren’t gone already. College is more than the next step – it has become some children and parent’s greatest challenge. And I’m not talking about the coursework; I’m talking about actually getting accepted.

The Value of College
Getting a job out of high school was the norm until a few years ago. High school prepared most of society for basic careers, and a few select individuals went on to college. Now, most companies are requiring college degrees for every fashion of job or career. To simply get a foot in the door for most companies, you must have higher level education. The golden ticket seems to be a degree from a notable university.

Playing the Game
Getting one of the select spots open at these universities takes more than a simple application and essay. It takes years of planning, strategy, and practice that would have even the most dedicated MMORPG player baffled. Strategic planning begins well before high school. Dedicated parents find the best public, private, or boarding schools available in their area and enroll their children.

Coursework geared at advancing these children beyond ordinary starts as early as the first grade. Middle school marks the transition for many. Those serious about gaining prestigious college admissions begin taking high school level classes before high school. Algebra, sciences, and even language classes offer these children a head start as well as an opportunity to take valuable advanced placement (AP) courses or GPA boosting electives during the high school years.

Taking the wrong classes or failing to score high enough in a classroom can doom a child to a second tier school. Other factors come into play such as activities outside of school, leadership opportunities, and continuous electives. It is far better to play in the band or perform in the theater for four to seven consecutive years than to try out different fun electives. The reward comes from the dedication this shows to potential schools.

The Reward
If you play the game successfully, you will have a great application, the right recommendations, terrific essays that are “out of the box,” and excellent credentials. For this effort, you stand a fighting chance at getting accepted to a “target” or “reach” school. Then you begin the application process again for scholarships and student loans to help pay for the privilege.

The Shortcut
Some families have the means and the ability to send their children to the best college preparation programs money can buy. American boarding schools offer far more than challenging coursework. They also offer the know-how and connections most local schools can not. Students applying from well-known boarding schools have been shown time and time again to be the best prepared applicants to a University. It is no secret that colleges tend to favor them. Whatever route you take, college requires planning much earlier than you probably ever anticipated. Start now.

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