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  • Financial Planning: Paying for School

    By Denise Schoenherr, Full-Time Faculty 
    Published October 2014

    Attending college is a very exciting period in life, but it can also be very costly if you are not prepared for the expenses. Education is an investment in your future, and can help you compete for a job once the degree has been completed. The cost of attending public and private institutions of higher education is increasing at a faster rate than inflation. With rising costs, students are finding it difficult to afford tuition and may use student loans made available through the federal government and some banks.

    What are student loans? 

    Federal loans are funds borrowed to help pay for your tuition that must be repaid with interest. Federal student loans are supported by the federal government and allow students and their parents to borrow money to help pay for college expenses.  Federal student loans basically have lower interest rates than the student loans offered by private banks.

    What kind of student loans are available? 

    Student loans include:

    • Subsidized Stafford loans: provide low interest rates and are based on a student’s financial need and income. With this type of loan the government pays the interest while the student is in school. Repayment begins 6 month after a student leaves school.
    • Unsubsidized Stafford loans: this type also provides low interest rate and is available to all students regardless of financial need. The student is responsible for the interest that must be paid while the student is in school and accrues then is added to the principle when the student enters repayment.  Repayment begins 6 months after the student has left school.
    • Parent PLUS loans: low interest loans that parents can obtain to help pay the cost of education for their student. Plus loans require a credit check. Repayment of PLUS loans begins following the final disbursement for the year.

    Repayment Plans 

    There are many repayment options offered when the time comes to start paying student loans. It is important to make sure students find the right fit for their situation. One of the first possible steps would be to consolidate all the student loans. With consolidation, the borrower is making one payment opposed to making several payments on different loans, which this may reduce monthly output of dollars. To get the latest options for loan repayment, visit the government website at: http://federalstudentaid.ed.gov/federalaidfirst/

    Payment options available include:

    • Standard payment
    • Extended payment
    • Graduated payment
    • Income contingent repayment
    • Income-based repayment

     

     

    Denise Schoenherr is a full-time faculty member at Kaplan University. The views expressed in this article are solely those of the author and do not represent the view of Kaplan University.

    The contents of this article are presented for informational purposes only. Always check with a professional regarding any questions you may have regarding financial services.

     

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