With the cost of a college education skyrocketing, you want to begin preparing for your child’s future as soon as possible. While it helps to put money away into different qualified plans, it also helps to know what your options are when it comes to the many different types of scholarships and loans that are available to you.
So in this post, we will look at some of the options you may be able to take advantage of in order to get money for your kids’ education.
The best way to describe a scholarship is a gift given by the school or a business or foundation as recognition for a student’s achievements. They can also be given based on financial needs.
Whatever the case, these never have to be repaid. This is one of the best ways to pay for an education, but know that how much you receive from a scholarship may have an impact on what you receive from other sources of assistance that you’ll learn about in this post.
Like scholarships, these do not need to be repaid. The most common type of federal grant is the Pell Grant, which is needs-based and available to full-time students as well as part-time students.
Supplemental Educational Opportunity Grants
Receiving these grants depends on the school because the government issues these grants to schools and the school then decides who receives them. If you are interested in these grants in order to pay for college, you will want to check with the school’s financial aid office to see if you’re eligible.
If a student doesn’t receive grants, this is an option. These loans are federally funded and are easier to get because they are loans. They are still needs-based but have a 5% interest rate that starts accruing after graduation.
These private loans are among the most common ways to pay for college, and they come both subsidized and unsubsidized. If possible, you want to be subsidized because the student won’t have to worry about interest while still in school.
With these loans, you can get up to $5500 per year with variable interest rates that are generally lower than what you might find in other types of loans. They can also be consolidated after graduation and there is a six-month grace period before repayment starts.
Parent Loans to Undergraduate Students (PLUS)
These loans have parents taking on the responsibility of repayments and they can take out an unlimited amount of money with a slightly higher interest rate. Like with Stafford loans, the company that provides the loan determines terms of repayment, so you want to look closely before you commit.
These are your main options for paying for college, so you will want to explore each one closely with your financial advisor and determine which one best fits your needs.