Over the last few years, the media has been full of accounts of students who take on huge loan commitments to complete college – students graduating with $60,000, $80,000, $100,000 or more in debt. These stories are scary but need not be your student’s fate! Here are some important things to keep in mind when confronting the college financial aid process:
Federally-backed student loans ARE aid! Even if you do not show any financial “need”, each student has a right to borrow $5500/year at below-market rates. Where else can a 19-year-old with no job, no credit history and no collateral get such a good deal?
There are limits to how much the student can borrow under federal programs. If the student keeps to these sources, he/she will graduate with “manageable” debt of less than $30,000. That’s on a par with financing a new car – for an asset that doesn’t depreciate!
Parents may take up the slack with loans of their own that are easier to qualify for than bank loans. The PLUS program allows parents to cover any amount of the cost of attendance left over after the student’s financial aid package. Parents must analyze how much they are willing and able to contribute from savings, income and loans, and clarify this with the student from the beginning of the college search process.
The key to avoiding financial aid horror stories? Make the financial aid process part of the college search process from the beginning! I can help parents make sure a student’s list includes colleges that are a great fit academically, socially AND financially. Call me at 847-660-8625 or click the “Contact Me” button at the bottom of the page.