Paying for college usually involves a patchwork of money sources. You might receive funds from grants or college scholarships. The student might participate in a federal work-study program or work part-time in an off-campus job. The family might have a 529 Savings Plan, or relatives might be pitching in to help. For many families, though, the last piece of the puzzle is student loans. In most cases it makes sense to maximize the amount of federal student loans first, but it is always a good idea to completely research all of your options before making any final decisions. In some cases, you might find that private student loans are more flexible for your particular financial needs than federal student loans. Discover Student Loans, for example, offers a number of options that might be the final pieces in your money quilt:
• Types of Student Loans: Federal student loans generally fall into broad categories such as student, parent, and consolidation, with some variations available to students who demonstrate extreme financial need. A private student loan company can tailor its products to meet more specific needs. Discover Student Loan categories include undergraduate, graduate, MBA, health professions, law, residency and bar exam.
• Loan Limits: While federal student loans may place a cap on the amount of money a student can borrow, Discover Student Loans can cover 100% of the cost of attendance after other types of financial aid, such as grants and scholarships, are taken into consideration.
• Interest Rates: Interest rates on federal student loans are set at a fixed amount, but Discover offers fixed and variable interest rate options. In some cases a private student loan lender can offer better interest rates to students who have already established good credit.
• Fees: Federal student loans charge a loan origination fee to the borrower. Discover Student Loans does not charge a fee. This could save a substantial amount of money if the loan is for a larger amount.
• Rewards: Federal student loans do not have any rewards. Discover offers a one-time 1% cash reward of the loan amount for achieving a 3.0 GPA, or its equivalent, on each new Discover student loan.
• Repayment: The standard repayment plan for federal student loans is ten years, but there are repayment options which can extend this amount. Discover begins with a fifteen year repayment plan, which could result in smaller monthly payments for the student borrower.
Although a credit check is required, another benefit is that private student loans do not require completing a FAFSA.
Get more information on student loan options in my new book, Secrets of a Financial Aid Pro. It explains the differences between federal and private student loans, recaps the entire financial aid process, and discusses the search for scholarships. It also provides insights for parents on talking to students of any age about money and debt. Order it now, and start involving children of all ages in discussions about how your family will pay for their college education.