NEWTON, Mass., July 12 /PRNewswire/ -- Many families max out savings,
grants and scholarships to pay for college, but still come up short. This
leaves many families at a loss to determine the most effective way to pay
for higher education.
SimpleTuition, Inc. (www.simpletuition.com), a company dedicated to
helping students and parents make sense of education financing choices, has
a few tips to offer the cost-conscious college student and family.
"Few students appreciate the cumulative amount of debt they are taking
on," said Kevin Walker, CEO, SimpleTuition, Inc. "By carefully selecting
the right options for financing - and monitoring their costs semester over
semester and year over year, students will be better prepared for student
loan repayment after graduation."
SimpleTuition recommends students first look into federal student
loans. Both subsidized and unsubsidized loans are backed by the Federal
government and currently have a fixed interest rate of 6.8% -- generally a
lower rate than what you'd find with private loans.
Once federal loans have been exhausted - and to the extent that the
family needs to borrow more - parents can consider the fixed-rate federal
PLUS loan and students, together with a co-signer, can look into private
loans to help pay the difference.
Dozens of lenders offer private student loan products, each with its
own set of interest rates, repayment terms, credit constraints, co-signer
requirements and fine print. Because of this wide range of products, it's
important for borrowers to research and compare options very carefully
"Selecting a private loan should be your last choice and should
represent the smallest percentage of your total financial aid portfolio, if
at all possible," said Walker. "Remember that almost all private student
loans have tiered pricing, based on the borrower's and co-signer's credit
profiles. This means that lower interest rates and lower fees are available
to those with stronger credit. Higher rates and fees are possible for those
with weaker credit."
-- Avoid turning to credit cards to pay for college. Many credit cards
come with high interest rates.
-- Put together a budget and do your best to follow it. By maintaining
minimal expenses and managing current expenses now, students can lessen
their borrowing needs and save money for when loans come due.
-- A part-time job and/or federal work study can help more than you might
expect. Even if a job generates only a couple thousand dollars per
school year - that amount can have a significant financial impact over
many years, if student borrowing is reduced by a commensurate amount.
-- Review education-related expenses, including student loan interest,
when preparing your taxes. There are a handful of meaningful tax
credits and deductions that may be available to your family as an
incentive to pursue a degree.
-- Try to imagine your future situation (income and expenses) before
taking out any student loan debt. Industry experts advise that student
loan payments should not exceed 8 to 10% of gross monthly income.
-- Be aware of your debt - even though you won't begin repayment for
years. Students should have a good understanding of what will be owed
post graduation. The more you are aware of the obligation you are
accruing, the more likely you are to be responsible about taking on
For more information, visit http://www.SimpleTuition.com.
SOURCE SimpleTuition, Inc.