There are two shocking statistics that have people worried about the price of college. 1) The average American college student graduates with nearly $37,000 in student loan debt. 2) Collectively, Americans owe nearly $1.3 trillion in student loan debt. Those are pretty scary numbers, to say the least.
So how do you avoid becoming part of that daunting statistic? The first and most important step: educate yourself–and early on.
Some Stats to Educate Yourself:
NCAN conducted a survey asking 150 low-income college-bound/hopeful students about financial aid—half of which were NOT applying for any aid. NCAN discovered that half of the non-applicants reported knowing nothing about financial aid!
Similarly, the Department of Education reports that only 45% of graduating seniors filed the FAFSA, 20% of the graduating class filed for NO financial aid of any kind, and that 44% of those non-applicants figured they were not eligible for aid.
Students are either learning about financial aid too late, or not at all, which is a large contributing factor to the astronomical student debt in America. Students are not taking advantage of all the aid opportunities available because they simply do not know about them, or have misconceptions.
Scholarships and Grants
Did you know students can apply for college scholarships as early as kindergarten? Many think that only high school seniors can apply for scholarships, when the reality is that they can start applying much earlier—and they should! By getting a jump-start on scholarships and grants, students can build up a source of gift-aid and ease the financial strain later on.
Another fun fact: did you know that the federal government is the largest provider of student financial aid? Their Free Application for Federal Student Aid (FAFSA and CSS) calculates the financial needs of each student, and can show them what financial aid they’re eligible for. Many private scholarships and loans also require the FAFSA to be filed, so EVERYONE should fill it out. (And re-file it every year you’re in college).
A student loan should be your last resort when it comes to financing your college education. Scholarships and grants are the most ideal, since they are gift-aid and do not have to be repaid. Loans, on the other hand, do. There are two types of student loans available: federal and private student loan. Federal loans are offered by the government, and typically have more flexible repayment options and potential forgiveness plans as well. Private students loans are a last-last resort, as they are often more strict in their policies.
Nevertheless, many students find themselves having to take out student loans in order to pay for their higher education. If you find yourself in this position, you must research, read up on, and educate yourself before committing to a specific loan. Understand your interest rates, how much you should take out, your repayment options, the rules and restrictions, and the consequences of defaulting before you sign on the dotted line. Go in with a plan; you’ll thank yourself in the long run. The extra effort can prevent you from a debt disaster.
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