Paying for College – Scholarships and Private Student Loans

BY GoodCall

Paying for College – Scholarships and Private Student Loans

Paying for college

Nobody ever said paying for college was supposed to be easy. But for many students, combining scholarships, grants, and federally backed and private student loans creates a clear path for a college degree.

Here are two reasons why it matters that you go to college:

Given those numbers, figuring out how to pay for college, even with student loans, is worth the effort.

Start with scholarships

Scholarships should be top of mind when you decide how to pay for college. Check out GoodCall®’s scholarship search engine to start your quest for ways to pay for college without loading up on school loans.

Why start with scholarships? They don’t have to be repaid, so every $1,000 scholarship you win (and some are even more lucrative) means $1,000 less you need to accept from a student loan company and repay after graduation.

Concurrently with applying for scholarships, you should fill out the Free Application for Federal Student Aid – more widely known as FAFSA. The FAFSA uses an algorithm to figure out your expected family contribution and, in some cases, qualifies you for federal Pell and other grants, including some state grants. Grants also do not have to be repaid under normal circumstances.

The FAFSA also qualifies you for federal student loans, including Direct Subsidized Loans made to the student and Direct PLUS Loans to graduate or professional students and parents of dependent undergraduate students. These are the most common federal loans.

Should I get private student loans?

But even the combination of scholarships, grants, and federal and state loans doesn’t always meet a student’s needs when it comes to how to pay for college. That’s where private student loans come into play for college. Loans of these type can even have lower interest rates.

That’s why it’s important to compare private student loans before selecting one. Luckily, some websites such as Credible.com make it possible to compare college loans from one leading student loan company side-by-side with others to find the right terms. And if you’re wondering what kind of student loan company would participate, top names such as Citizens Bank, Discover Student Loans, and Sallie Mae are among the potential lenders at Credible. There’s no origination fee, service fee, or prepayment penalty.

Applying for student loans

LENDER VAR. INTEREST RATES FIXED INTEREST RATES MIN. LOAN AMOUNT LOAN TERMS (YEARS) APPLICATION
130x44-citizensbank 3.31% – 11.13% 5.25% – 11.90% $1,000 5, 10, 15 applynow_btn
CollegeAve-refi + private 2.93% – 11.14% 4.70% – 12.89% $2,000 8, 10, 12, 15 applynow_btn
Connext 3.00% – 10.54% 5.75% – 11.00% $2,000 10, 15 applynow_btn
Discover 3.87% – 11.12% 6.24% – 12.99% $1,000 15, 20 applynow_btn
iHelp - refi + private 3.75% – 9.75% N/A $1,000 20 applynow_btn
raise 5.20% – 15.61% N/A $10,000 5, 7, 10 applynow_btn
RISLA N/A 3.99% – 5.68% $1,500 10, 15 applynow_btn
SallieMae 3.25% APR – 10.22% 5.74% APR – 11.85% $1,000 5, 10, 15 applynow_btn

Is there a downside to private student loans?

One advantage of federally backed loans over private student loans is that borrowers of the federal variety are eligible for certain programs, such as income-based repayment, in which the borrower is obligated to contribute a percentage of his or her income to repay the loan. Those programs are not available for private student loans. Public sector loan forgiveness is also not available for these student loans.

But private student loans can be refinanced for lower interest rates, longer repayment terms, or both. Student Loan Repayment Calculators can show the connection between loan amounts, interest rates, repayment terms and more on your monthly payment for college loans.