international student life

international student

Seven Strategies to help Pay for College.

College Choice, Need-based and Merit-based financial aid and Student loan choice.

With the rising cost of college, one needs to be careful how they plan to pay for it so that they are not left with hefty student loans that they are unable to pay.

Here are some of the things one can do when trying to decide what college they can afford.

Need based financial aid available.

One should assess their ability (or parents ability) to pay and the students chances of getting need based financial aid.

Colleges use the expected Family contribution to determine financial need. So you need to know how much your family can contribute by using the calculator at this website (www.FAFSA4caster.ed.gov).

Then use the Net-Price calculator posted by each of the colleges you are considering to determine how much need based financial aid the colleges is likely to contribute.

You can add these two numbers and see if the Total cost (family contribution + financial aid) covers the total cost of college. You want to find a college whose financial aid in addition to your family contribution are able to cover all the college costs so you don't have to take students loans.

To find which colleges offer the best financial aid, use the "Financial Aid Shopping Sheet". (Google it and you will find it in the www.ed.gov website).

Qualifying for Merit-based financial aid

Many colleges offer merit-based financial aid to the top 25% of their students. So if you hope to apply for merit based financial aid, you need to look for colleges where your academic performance will put you in the top 25 %.

Otherwise if you are not very strong academically, and apply to a very competitive college, you will not be able to get merit based financial aid.

Prestigious Colleges's investment vs Returns.

For a small percentage of students, attending a prestigious and often high cost college may pay big for them in future in terms of career and future earnings. However, for the majority of students, this is not true.

Therefore you need to find a college that is the right match for you and not worry too much about its prestige nationally. There are many Regional and State colleges that offer superb education and are not expensive.

Also choosing the right major and taking advantage of every opportunity you encounter have more impact on future earnings than a colleges prestige.

Merit based Scholarships don't cover all costs.

If you have a specific talent, academic or athletic and a college want to offer you merit based financial aid based on that talent, you need to make sure that the scholarship will cover all expenses. Most likely, merit based scholarships or financial aid cover only tuition and don't cover living expenses which can add up to lots of money.

Student Loan Types: Federal backed vs Private loans.

Sometimes you will find private loans that offer lower interests than the 6.8% rate for unsubsidized Stafford loan or even the 3.4% rate for the subsidized Stafford loans.

Problem with Private loans is they require underwriting (to determine eligibility for the loan) and usually will require a cosigner. Only a few applicants, especially those with highest credit get the lowest interests. Most borrowers get high interests which makes the Private loans not as attractive as the Federally funded loans.

Only borrow what you can reasonably be able to Pay.

A student should be very careful not to borrow more money than they can repay. One way to determine how much to borrow is to limit the total amount borrowed to the amount of salary you expect to earn in your first year after graduation. You can research this on Salary.com website.

For example if you expect to earn $40,000 in your first year after graduation, you should borrow no more than $40,000. It is however recommended that you don't borrow more than $32,000 if possible.

Parents should not cosign a loan for their kids.

As a cosigner, you put yourself equally responsible for the loan if your student defaults. This can damage you credit if the students even misses one payment.

Most private loans are not forgiven if the student dies or becomes disabled. However if the student dies and you did not cosign for him/her, then you don't have to pay the loan. Parents can also take out a Parents PLUS Loan which has a fixed rate of 7.9% and let you defer payment up to 6 months after student graduates. This loan if forgiven if the student you borrowed for dies or if you (parent) becomes permanently disabled.


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