If you are off to school there is a very good chance that you and/or your parents will need to secure additional funding. The cost of higher education is steep, but it is a worthwhile expense. If you are thinking about your financing options, there are a few things to consider.
The first thing you need to evaluate is how much money you really need to borrow to cover the costs of your education. Will you be paying for your room and board, or are those costs included in your tuition. Often schools will include dorm expenses and cafeteria plans in their invoices. Books, on the other hand, are an expense you will be responsible for.
Have a frank conversation with your family. Are they planning on contributing to your educational expenses? If so, how much will they cover? And what portion of your expenses do they expect you to be responsible for?
Then you need to come up with a realistic budget. This should include all your expenses: tuition, housing, food, transportation, books, entertainment, supplies, clothing, and travel. Then factor in the amount of money you will be getting from your family and any salary you expect to earn, along with any grants or scholarships you have earned. You need to have an understanding of how much money you will spend versus what you will be bringing to the table in the form of salary, savings, and grants in order to be able to make an informed decision about how much you need to borrow. There are a number of financial calculators on line which can help you calculate that amount. Your college of choice will also most likely be able to help you in determining how much money you need. Seek out their financial aid offices for assistance.
Once you have determined how much money you will need to borrow, it is time to start shopping for loans. You should research the loans that are available to you. Do you qualify for student loans? Will your parents be getting a loan to help pay for your education? Or is a private loan a better option for you?
Often students will need to supplement any scholarships or grants they have earned. Private loans are often the answer. Private education loans are generally less expensive than other kinds of debt. Make sure to carefully research the terms you are offered to ensure you are getting the best loan possible.
After you have received a few loan offers compare the interest rates and other terms to select the best loan for you. If you are offered a variable rate loan, does it have a cap as to how high it can go? When will you need to begin making payments? What are the penalties for late payments? Will your loan be convertible if you decide to attend graduate school upon commencement?
If you are having difficulty securing a loan under your own credit score, you may want to ask your parents to co-sign a loan for you. Often they will have a higher credit score than you and that will result in more favorable loan terms, which means you will pay less for your loan over time. Bear in mind however, that the co-signor is ultimately responsible for the loan if you default.
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