Funding Your College
If you receive Financial Aid, that money will help pay for college, trade or vocational school. This can cover educational expenses including tuition and fees, room and board, books and supplies, and transportation. The different types of financial aid are:
- Work Study
Grants and Scholarships do not have to be paid back. This is FREE money. Work Study gives you work on or around campus while you go to school. Hours are flexible and employers know school comes first. There are BILLIONS of dollars available in financial aid.
For more information on Grants and Scholarships Click Here
Everyone does not qualify for Financial Aid or may not receive enough funding to cover their college expenses. When this happens, the next option may be to take out a loan.
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Federal Undergraduate Loans
As an undergraduate, it’s usually best to hit your federal lending limit
(ranges from $5,500 to $12,500 per year) as those rates will likely be the lowest available. These loans offer additional protections as well. The interest rate for these is 2.75% with a 1.059% origination fee.
Parent PLUS Loans
Once you hit your lending limit, you’ll likely turn to Parent PLUS loans. These loans are not subsidized by the federal government and can be more costly depending on your situation. They are also easier to get for those with low credit scores. The interest rate does not vary on an individual basis and is 5.3% for 2020-2021 with a 4.248% origination fee.
These loans should only be used after you hit your federal undergraduate limit and begin weighing your other options. If you don’t need to take out more loans, don’t.
Calculate the difference between Parent PLUS and Private loans here
Federal loans for grad students are more expensive than undergrad loans since they are not subsidized. Depending on a variety of factors, they may be the best choice for you. Consider whether or not you’d be eligible for the protections and repayment options that federal loans provide, such as Public Service Loan Forgiveness or Income-Based Repayment.
Many MBA and law students who don’t meet the criteria are more likely to consider private loans, where they can potentially save thousands of dollars.
Oftentimes, graduate students (MBA, law, etc.) follow a path where they are not eligible for features of federal loans. For example, many MBA students opt for a route that doesn’t involve public service, and therefore can’t take advantage of PSLF. In these types of situations, the most affordable loan becomes the best option.