If you are worried about paying for college, several flexible financing options are available. Picking and choosing the right ones for you can help you afford a degree with greater peace of mind.
What Is the Best Way to Finance College Tuition?
The best way to finance college tuition depends on your unique financial position and goals for the future. If you aren’t worried about going into debt to earn your degree (as is the case with 70% of Americans today), a loan might be the right choice for you. Otherwise, you could get more creative with your financing options to reduce your future payments.
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Savings plans:
If it’s not too late, create a 529 college savings plan before you have to pay for tuition. This is a family savings plan that is tax-free as long as the money is spent on education.
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Scholarships:
Scholarships are one of the best ways to pay for college, as you do not have to pay them back. Seek out federal and local scholarships before and during your college career to help you cover the costs.
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Grants:
You may qualify for a federal or state grant, which is a type of financial aid for low-income families that you do not have to repay. An emergency grant may also be available in light of the COVID-19 pandemic.
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Financial aid appeal:
An aid appeal is a written request from a student asking the college for more money. The college might approve the appeal and work with you, especially if you had a recent change in your financial situation.
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Work-study programs:
You can help finance your own education by getting a job while you attend classes or signing up for a work-study program.
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Tax credits:
Your family can use the American Opportunity Tax Credit to receive up to $2,500 in tax credits per child.
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Loans:
If you’ve exhausted all of your other payment options, you can apply for loans to pay for your college education upfront. It will be your responsibility, however, to repay these loans – plus interest – in the future.
This is a general overview of several ways to pay for college tuition. If you want reduced costs overall, consider enrolling in a community college or living off-campus. These strategies could reduce the general expense of going to college.
How Do I Pay for College Loans?
If you need to take out loans to pay for college tuition, create a strategy for paying them off over time. A smart, proactive strategy can help you reduce the amount you will pay in interest.
First, choose federal student loans before you turn to private loans. Federal student loans come with special benefits such as loan forgiveness opportunities and income-based repayment plans.
You will be responsible for paying off your student loans once you graduate, in most cases. If you choose federal loans, the government offers several different types of repayment plans.
The right plan will depend on your goals – do you want to pay off your loans as quickly as possible, even if that means bigger payments per month? Or would you prefer smaller payments over time? Use the loan simulator tool to see which is the best choice for you.
other valuable tips:
Student Aid: Most Undergrads Receive It, Study Says
College Finance: Five Tips To Keep Track Of Your Money And Not Blow Your Budget
What Type of Loan Is Appropriate for Financing College Tuition?
You may be eligible for several different federal loan options as a college student: a Perkins loan, direct subsidized loan, direct unsubsidized loan or direct PLUS loan. Each type of loan comes with different interest rates and repayment requirements.
If you qualify for a direct subsidized loan, this has the lowest interest rate. Plus, the interest rate is fixed, and the government pays the interest while you’re in college. Choosing the right type of loan for financing your college tuition may take assistance from a financial advisor.
Alana Redmond is a legal content writer and consumer safety expert that works with Colburn Law, a Seattle personal injury law firm.
Image Credit: by twenty20.com
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