Financing for Your Future
Federal Work-Study
Federal Work-Study programs are slightly different than other methods listed here. With FWSs, as they are also known, graduate and undergraduate students have the opportunity to work part-time to pay for the cost of education. These jobs are typically for the college the student is attending and in a field of interest to their major. However, these jobs can often be outside of the school with non-profits or public agencies and schools can arrange for work with a for-profit organization.
Student Loans
There are numerous types of loans available for students, which isn’t surprising since the need is growing. Loans, unlike grants and scholarships, is money that must be repaid often with interest. Options that students can look into include loans through the learning facility they’ll be attending, federal institutions and private institutions.
Federal Loans
Subsidized Stafford Loans – Approval for these loans is also dependent on financial need and funds are borrowed from the U.S. Department of Education. Other requirements include no previous student loan defaults and at least part-time enrollment. These are some of the easiest loans to obtain allowing students to defer payments until after graduation and have the interest until then paid by the government. The 2008-2009 interest rate for Subsidized Stafford Loans has been set at 6%.
Unsubsidized Stafford Loans – These loans are just like the subsidized Stafford Loan with the exception that financial need isn’t as much a consideration, interest begins to accrue immediately, though it can be deferred, and the interest rate for 2008-2009 is slightly higher at 6.8%.
Perkins Loans – These loans are awarded to either undergraduates for up to $4,000 a year or graduate students for up to $6,000 a year. Students can be part-time or full-time however the amount awarded depends on financial need with Pell Grant recipient being considered first, the amount of school funding and the amount a student already has in aid.
Grad PLUS Loans – This subsidized federal student loan allows students to borrow up to the total cost of education minus any financial aid that has already been received. Financial aid isn’t so much a consideration as the credit of the borrower. The student must be a graduate student enrolled at least part-time and must have first applied for both Stafford loans before being eligible to apply for the Grad PLUS Loan. The Interest rate for 2008-2009 is set at 8.5% when using the FFEL Program and 7.9% when using the Direct Loan Program.
Private Loans
Private student loans can come from a number of sources and most financial institutions will offer them. Like federal loans private loans are offered to graduate and undergraduate students as well as their parents. Private loans vary in their terms but tend to have higher interest rates compared with federal loans. Because of this factor private loan should be sought only after attempting to receive a federal loan.
Student Credit Cards
Student credit cards are cards specifically for students who are needing additional funds for college. They are very similar to other credit cards but have put focus on student needs both for school and learning how to use credit. They not only help build credit, which many students lack, but also have programs to help students learn more about credit, debt, budgeting and more. They also offer reward programs geared to student needs, low introductory interest rates and some even give rewards for good grades. To learn more about Student Credit Cards please visit our Student Credit page.
Parent Loans
Federal PLUS loans – Parents with a dependent child who is enrolling at least part-time as an undergraduate at an approved school can obtain a Federal PLUS Loan. Both the Federal Family Education Loan Program and the William D. Ford Federal Direct Loan (Direct Loan) Program offer these loans. Loans can be made for up to the total cost of the education minus any grants, scholarships or other financial aid that has already been awarded.
College/University Loan – These of course are loans made between the school a student will be attending and their parent.
IRA Withdrawals
An IRA, or Individual Retirement Account, is typically set up as a retirement savings account of course. However, money in this account can be withdrawn to pay for school if it is a traditional or Roth IRA account. When using an IRA to cover the cost of higher education the 10% fee that is typically charged for withdrawing prematurely will be waived.
Home Equity Loans
For students or parents of a student that own their home there is the possibility of taking out a home equity loan to cover education expenses. Home equity is the positive difference between how much is owed on a home and what the market value of the home is. The amount of the loan will be a percentage of the equity amount. However, this option shouldn’t be exercised until all other financial options have been exhausted. This is because when a home equity loan is taken out the home is used as collateral for the loan which means the home can be taken if loan payments can’t be made.
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