As you graduate…paying for college

May is the time of year when we think about all of the local high schools having graduation ceremonies for our area’s best and brightest. We wish all of our graduates a sincere congratulations and a prosperous future, but now is the time when the financial and higher education decisions you make will impact you for the rest of your life, I said the rest of your life!

Student loans and debt: For many students, their only option to pay for that higher education will be to take on debt through student loans. Currently it is estimated that student loans debt is over one trillion dollars and that figure is expected to continue to rise. That forecast seems pretty bleak, but it does not have to be. Be smart about what you want to achieve and how you go about getting it.

There are two student loan options — federal or private.

With federal loans, students can choose from the U.S. Department of Education or other lenders to work with to pay for college. Federal loans tend to offer more favorable options and consumer protections for borrowers. Interest rates on Direct Student Loans are fixed for the life of the loan and are often tied to economy.

Another option is private student loans whose rates are not known until the student applies for the loan, and then the rate is calculated based on the market rate and the credit history of the borrower and/or cosigner. Private student loan interest rates can fluctuate over time and interest begins to accrue once the loan is dispersed.

Grants, scholarships and other sources of funding also can help offset the cost of higher education. Don’t be afraid to ask others if they know of any grants or scholarships. Local community groups offer small scholarships but they are often overlooked because no one knows about them! Many of these scholarships are only for a few hundred dollars, but every little bit can go a long way in helping you to reach your educational and career goals.

Make smart money decisions to avoid unnecessary debt. There are numerous resources to help graduates make smart money decisions before heading off to school this fall.

The National Extension personal finance community developed ten fact sheets for students and their parents to better understand what they are getting themselves into before they borrow money. This is the list of topics covered by these fact sheets.

• College Savings Options — https://articles.extension.org/sites/default/files/Colleges_Savings_Options.T.Mountain.pdf

• Paying for Education and Training Beyond High School — https://articles.extension.org/sites/default/files/Paying_for_Education_and_Training_Beyond_High_School

• Types of Student Loans — https://articles.extension.org/sites/default/files/Types_of_Student_Loans_B.O’Neill.pdf

• Student Loans: Responsible Borrowing — https://articles.extension.org/sites/default/files/Student_Loans_Responsible_Borrowing_M.Welsh.pdf

• Determining Your Student Loan Services and Loan Balance — https://articles.extension.org/sites/default/files/Determing_Loan_Balance_Servicer_C.Johnson.pdf

• Choosing a Federal Student Loan Repayment Plan — https://articles.extension.org/sites/default/files/Federal_Student_Loan_Consolidation_Forgiveness_M.Welsch.pdf

• Federal Student Loan Consolidation and Forgiveness — https://articles.extension.org/sites/default/files/Federal_Student_Loan_Consolidation_ Forgiveness_M.Welsh.pdf

• Recovering from Student Loan Default — https://articles.extension.org/sites/default/files/Recovering_from_Student_Loan_Default_C.Johnson.pdf

• Student Loans: Later Life Impacts — https://articles.extension.org/sites/default/files/Student_Loans_Later_Life_Impacts_B.O’Neill.pdf)

• Student Loan Legislation: Changes You Need to Know — https://articles.extension.org/sites/default/files/Student_Loan_Legislation_D.Evans_pdf

My final piece of advice is to enjoy your graduation, but after the party is over, sit down and map out the best possible plan. You don’t want poor or impulsive financial choices made now to cloud an otherwise bright future.

Cindy Williams40 Posts

Cindy Williams is the Meadowlark Extension District agent in the areas of food and nutrition.

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