Federal Stafford Loans are loans based on student financial need and as the name implies, they are regulated by the federal government. There are three categories of Stafford Loan: Subsidized, Unsubsidized, and Additional Unsubsidized Stafford Loan. The Subsidized Stafford Loan is a long-term loan with a low-interest rate. Subsidized means that the government will pay the interest on the loan while you are attending school or when you student request a grace period or deferment.
Unsubsidized is also long term with a low interest rate, however it is not need-based and is generally a good option for those that don't qualify for other types of financial aid, or who still need more money in addition to other forms of financial aid. Unsubsidized means that you are responsible for the interest. Payments can be deferred.
The additional unsubsidized Stafford loan is reserved for independent students and must meet several federal guidelines.
Federal Perkins Loans are reserved for students in extreme financial need. They have very low interest rates and you have the ability to defer payments for up to 9 months upon graduation or part time status. The amount of funds available for Perkins Loans is extremely limited, which means the amount you receive will be low. Recipients of this loan will likely need to supplement it with private loans.
Parent Plus Loans. Plus loans are given to the parents of students attending college. This loan is based on a borrowers credit score. The benefit of this loan is that you are borrowing federal money, which means the interest rates will be low. Some benefits include the ability to borrow the total cost of tuition The loans are non-need based, the interest may be tax deductible and they require no collateral, additionally the interest rate is fixed so there isn’t a concern of rising rates.
Graduate Plus Loans. This loan is a new program which enables students with a good credit rating to use federal funds to pay for graduate school. Like the Parent plus loan they are not need based, the interest rate is fixed and the interest is tax deductible. Additionally, a borrower can borrow up to the total cost of their tuition.
When it comes to federal loan programs there is a tremendous variety. They can be an extremely beneficial solution to paying for higher education.
Showing posts with label tuition. Show all posts
Showing posts with label tuition. Show all posts
Friday, November 21, 2008
Monday, November 10, 2008
Should College Students Pay For Their Education?
High school graduation is upon you and your child wants to take the next step. College is not cheap these days. The costs continue to rise each year. This fact has some folks asking, should college students pay for their education?
Higher education is a necessity these days. A student with an advanced degree beyond the high school diploma has a world of options available to them. Depending on the program of study, college students can apply for internships and gain valuable experience while they are still in college. All of this adds up to a brighter future in the world of work.
Parents continue to support their children through the college years. A summer job is hardly enough work to finance an education, so parental help is necessary. Some parents, however, don’t have the finances to fund a college education for one child, let alone two or three.
Students begin the journey towards a college education when they are in high school. Here, they map out a plan to get them to the college of their choice. These are the years when grades, volunteer work, and other opportunities are worked on. High school sets the stage for college.
Students that use high school as a staging area for further educational pursuits are, in essence, trying to pay for their education. Good grades can lead to local scholarships. Athletic students can earn tryouts from college scouts that could lead to scholarships.
Financial aid can come in the form of grants, loans, institutional scholarships, and private funding. Senior year is the time when aid is applied for. Hard work pays off in the form of a lucrative aid package that limits the amount of funding parents need to provide. With just a bit of help from the parents, college students have paid for their education.
On the other hand, parents can start an educational savings fund for their kids as soon as they are financially able. A total of 529 plans exist for each state, and can be used for all educational needs of the college student. This also relieves the financial burden on parents because even a small amount added over time equals substantial funding for college.
If parents are worried about how they will manage to run a household and support a college student, start early. Prepare your child to shoulder some of the responsibility by getting their act together and following a game plan for the high school years. Parents can prepare early by starting a college savings fund in the name of each child.
By working together, the problem of funding a college education becomes less painful. Should college students pay for their education? Yes, but not alone. They should do everything within their power to obtain the money they need. Parents need to do the same. College is a rite of passage - make it a smooth one.
Higher education is a necessity these days. A student with an advanced degree beyond the high school diploma has a world of options available to them. Depending on the program of study, college students can apply for internships and gain valuable experience while they are still in college. All of this adds up to a brighter future in the world of work.
Parents continue to support their children through the college years. A summer job is hardly enough work to finance an education, so parental help is necessary. Some parents, however, don’t have the finances to fund a college education for one child, let alone two or three.
Students begin the journey towards a college education when they are in high school. Here, they map out a plan to get them to the college of their choice. These are the years when grades, volunteer work, and other opportunities are worked on. High school sets the stage for college.
Students that use high school as a staging area for further educational pursuits are, in essence, trying to pay for their education. Good grades can lead to local scholarships. Athletic students can earn tryouts from college scouts that could lead to scholarships.
Financial aid can come in the form of grants, loans, institutional scholarships, and private funding. Senior year is the time when aid is applied for. Hard work pays off in the form of a lucrative aid package that limits the amount of funding parents need to provide. With just a bit of help from the parents, college students have paid for their education.
On the other hand, parents can start an educational savings fund for their kids as soon as they are financially able. A total of 529 plans exist for each state, and can be used for all educational needs of the college student. This also relieves the financial burden on parents because even a small amount added over time equals substantial funding for college.
If parents are worried about how they will manage to run a household and support a college student, start early. Prepare your child to shoulder some of the responsibility by getting their act together and following a game plan for the high school years. Parents can prepare early by starting a college savings fund in the name of each child.
By working together, the problem of funding a college education becomes less painful. Should college students pay for their education? Yes, but not alone. They should do everything within their power to obtain the money they need. Parents need to do the same. College is a rite of passage - make it a smooth one.
Thursday, November 06, 2008
Should College Students Have Credit Cards?
It was scary enough to think of them driving a car at sixteen. Now they are heading off to college. Most parents are not worried about their teenagers getting their hands on a credit card — the plastic of choice for college students. But should they have credit cards in the first place?
It never fails. If you advise your child against something, they will want to do it even more. That goes for credit cards, too.
College students are the fastest growing untapped market. They are not fully adults but not children either. They represent millions of dollars in buying power. They qualify for loans to attend college and other financial aid.
Credit card companies often make deals with colleges to distribute applications to their students in exchange for credit cards that carry the college logo or school name. It’s too bad that those applications are not accompanied by some literature or a course in money management. When the college students qualify for those high credit limits, they don’t account for the fact that they don’t have the income to repay their purchases.
The question is not whether college students should have credit cards but instead, who should give them one. They will acquire one whether parents want them to or not. To head off disaster, parents can be the one to supply the credit card for their college student.
You can add your college student to your own credit card account. You can have a card issued to them in their name but where you can see what they purchase on the account. Set some ground rules and see what becomes of the situation. If good money management has been a part of their life up until then, the student will have a fighting chance of resisting the temptations of plastic.
Go over the statements once a month with them. This can be done over the phone if they attend school far away, or in person if they can make it home for a weekend. Keeping in touch and setting up payments adds accountability to the equation. With a credit card, they will need that from you.
Another option is to open a bank account and get a debit card. Your college student can use the debit card like a Visa or MasterCard. By adding a certain amount of money to the account each month, you are setting a “credit limit” for them. If they can manage the money in this account over a period of time, they could prove themselves ready for a credit card.
College students may not realize the importance of a good credit score, but their parents do. In an attempt to keep their credit good, help them ease into the world of plastic by providing a proving ground of your own making to test their mettle.
It never fails. If you advise your child against something, they will want to do it even more. That goes for credit cards, too.
College students are the fastest growing untapped market. They are not fully adults but not children either. They represent millions of dollars in buying power. They qualify for loans to attend college and other financial aid.
Credit card companies often make deals with colleges to distribute applications to their students in exchange for credit cards that carry the college logo or school name. It’s too bad that those applications are not accompanied by some literature or a course in money management. When the college students qualify for those high credit limits, they don’t account for the fact that they don’t have the income to repay their purchases.
The question is not whether college students should have credit cards but instead, who should give them one. They will acquire one whether parents want them to or not. To head off disaster, parents can be the one to supply the credit card for their college student.
You can add your college student to your own credit card account. You can have a card issued to them in their name but where you can see what they purchase on the account. Set some ground rules and see what becomes of the situation. If good money management has been a part of their life up until then, the student will have a fighting chance of resisting the temptations of plastic.
Go over the statements once a month with them. This can be done over the phone if they attend school far away, or in person if they can make it home for a weekend. Keeping in touch and setting up payments adds accountability to the equation. With a credit card, they will need that from you.
Another option is to open a bank account and get a debit card. Your college student can use the debit card like a Visa or MasterCard. By adding a certain amount of money to the account each month, you are setting a “credit limit” for them. If they can manage the money in this account over a period of time, they could prove themselves ready for a credit card.
College students may not realize the importance of a good credit score, but their parents do. In an attempt to keep their credit good, help them ease into the world of plastic by providing a proving ground of your own making to test their mettle.
Saturday, November 01, 2008
Fight the Rising Cost of Tuition With a 529 College Savings Plan
Your child is ten years old, but has decided they want to be a doctor. You’re probably pleased with the prospects of having a doctor in the family. However, if you’re like most parents, you try to hide the panic as you consider how much a college education eight to ten years in the future will cost. Luckily, there is 529 college savings to help fight the rising cost of tuition.
529 college savings plans are available in and administered by each state. Quite often they allow an investment firm or mutual fund company to manage the accounts. While the plans vary by state, they do have some things in common.
The College Savings Plan Network, a national non-profit organization, works to make a college education affordable for families, regardless of their income level. They list various 529 plans and allow you to compare them to find the best one for you. You may search for it on the internet to visit their website.
One of the main advantages of using a 529 college savings plan is that they are federally and state tax-advantaged to encourage people to save for a college education. There are two basic forms: college savings plan and prepaid tuition program. Both plans allow you to save money free from federal income tax and possibly withdrawn as federally tax-free if used for a qualified college or university in your state.
The 529 prepaid tuition program allows parents, grandparents, and anyone else interested in helping pay for a child’s education to lock in future tuition at the current rate. The plan may be funded in a lump-sum or in monthly installments. The 529 college savings plan is an account paid on the behalf of a child and is dependent upon the saving goals originally set. They receive a return based on a variable rate similar to a bond, but may not receive as high an interest rate.
Your child is never too old or too young to start a 529 account. Of course, the sooner you begin saving, the less you’ll have to pay out to reach a certain level. If you begin saving when your child is a baby, you may only have to invest $100 a month to reach the savings you desire. Whereas if you wait until your child is about to start high school, you’ll likely have to save nearly $600 a month to reach the same level.
Planning ahead is wise when it comes to your child’s future educational goals. Use 529 college savings to help fight the rising costs of tuition. Starting an account, sooner rather than later, will not only benefit your child, but could have benefits for you, as well.
529 college savings plans are available in and administered by each state. Quite often they allow an investment firm or mutual fund company to manage the accounts. While the plans vary by state, they do have some things in common.
The College Savings Plan Network, a national non-profit organization, works to make a college education affordable for families, regardless of their income level. They list various 529 plans and allow you to compare them to find the best one for you. You may search for it on the internet to visit their website.
One of the main advantages of using a 529 college savings plan is that they are federally and state tax-advantaged to encourage people to save for a college education. There are two basic forms: college savings plan and prepaid tuition program. Both plans allow you to save money free from federal income tax and possibly withdrawn as federally tax-free if used for a qualified college or university in your state.
The 529 prepaid tuition program allows parents, grandparents, and anyone else interested in helping pay for a child’s education to lock in future tuition at the current rate. The plan may be funded in a lump-sum or in monthly installments. The 529 college savings plan is an account paid on the behalf of a child and is dependent upon the saving goals originally set. They receive a return based on a variable rate similar to a bond, but may not receive as high an interest rate.
Your child is never too old or too young to start a 529 account. Of course, the sooner you begin saving, the less you’ll have to pay out to reach a certain level. If you begin saving when your child is a baby, you may only have to invest $100 a month to reach the savings you desire. Whereas if you wait until your child is about to start high school, you’ll likely have to save nearly $600 a month to reach the same level.
Planning ahead is wise when it comes to your child’s future educational goals. Use 529 college savings to help fight the rising costs of tuition. Starting an account, sooner rather than later, will not only benefit your child, but could have benefits for you, as well.
Thursday, October 23, 2008
Comparing Various College Savings Plans
College expenses are expected to rise. In fact, by the time a child born this year reaches college age, tuition is expected to be three to four times greater than it is now. Families with children are already preparing for the inevitable by comparing various college savings plans and choosing the one that will best suit their needs.
Qualified Tuition Programs (QTPs), also called 529 funds, are the best way to save for your child’s educational future. You may establish a 529 fund (named after the IRS 529 code) by pre-paying for your child’s education, or by starting a college savings plan. The largest benefit to the pre-paid tuition is that the in-state college or university must lock in the rate of tuition based on the fees at the time of its inception. There are no guarantees with the college savings plan.
Every state in the country has some form of state 529 plan. Some states offer only the college savings plan, some states offer only the pre-paid plan, and a few states offer both plans. A group of private colleges are also offering national pre-paid tuition plans for private and independent colleges. This is known as the Independent 529 Plan.
The 529 pre-paid tuition plan was established to guarantee the savings will increase at the same rate as college tuition. If you purchase a year’s worth of tuition today, it will be worth a year’s worth of tuition when your child is ready to use it in ten years. The value will remain the same regardless of how much the tuition actually increases.
This plan allows a student’s parent to lock in the tuition rate at the time they begin paying on the plan. It offers peace of mind and offers a higher rate of return on your investment than the other plans. There is no risk to the principal and are usually guaranteed by the state in which they were established. These plans are exempt from federal income tax, and often from state and local income taxes. If the student chooses not to attend college, or dies before attending, the plan can be transferred to another family member.
The 529 college savings plan differ in that they do not offer any guarantees on tuition rates when the child reaches college age. They are a tax-exempt saving plan earmarked for education, but they are subject to market upheavals. Because they are more risky, there is potential for a greater return on your investment. The plan is adaptive based on the age when the plan is started and how long it will take the student to enter college.
Anyone can contribute to a student’s 529 plan, regardless of which plan the student has. Each state will have some limitations to their plans, so check with the state in which you live for their requirements. You may be able to make periodic withdrawals, but again, check with your state for specifics.
Besides the 529 Tuition plans, you may use the tried and true methods of savings bonds, putting money into traditional money market funds, or trust funds. Surely by comparing various college savings plans you will be able to find one that will meet your current financial and your child’s future educational goals.
Qualified Tuition Programs (QTPs), also called 529 funds, are the best way to save for your child’s educational future. You may establish a 529 fund (named after the IRS 529 code) by pre-paying for your child’s education, or by starting a college savings plan. The largest benefit to the pre-paid tuition is that the in-state college or university must lock in the rate of tuition based on the fees at the time of its inception. There are no guarantees with the college savings plan.
Every state in the country has some form of state 529 plan. Some states offer only the college savings plan, some states offer only the pre-paid plan, and a few states offer both plans. A group of private colleges are also offering national pre-paid tuition plans for private and independent colleges. This is known as the Independent 529 Plan.
The 529 pre-paid tuition plan was established to guarantee the savings will increase at the same rate as college tuition. If you purchase a year’s worth of tuition today, it will be worth a year’s worth of tuition when your child is ready to use it in ten years. The value will remain the same regardless of how much the tuition actually increases.
This plan allows a student’s parent to lock in the tuition rate at the time they begin paying on the plan. It offers peace of mind and offers a higher rate of return on your investment than the other plans. There is no risk to the principal and are usually guaranteed by the state in which they were established. These plans are exempt from federal income tax, and often from state and local income taxes. If the student chooses not to attend college, or dies before attending, the plan can be transferred to another family member.
The 529 college savings plan differ in that they do not offer any guarantees on tuition rates when the child reaches college age. They are a tax-exempt saving plan earmarked for education, but they are subject to market upheavals. Because they are more risky, there is potential for a greater return on your investment. The plan is adaptive based on the age when the plan is started and how long it will take the student to enter college.
Anyone can contribute to a student’s 529 plan, regardless of which plan the student has. Each state will have some limitations to their plans, so check with the state in which you live for their requirements. You may be able to make periodic withdrawals, but again, check with your state for specifics.
Besides the 529 Tuition plans, you may use the tried and true methods of savings bonds, putting money into traditional money market funds, or trust funds. Surely by comparing various college savings plans you will be able to find one that will meet your current financial and your child’s future educational goals.
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