Everyone who is planning on sending a student to college wants to know how to save money on student loans. But how is it done?
There are many ways to achieve this goal but it takes careful planning and research. The first steps might be to have your child apply for general financial aid or a loan through FAFSA. This is the financial aid portal that introduces a future college student to a host of different financial aid choices.
FAFSA starts the process to find out what you may be eligible for before applying to schools. It’s always a good idea to see what grants the student may be eligible for before taking out a loan.
If a student does well in school, they may also qualify for scholarships. Scholarships, like grants, do not have to be paid back.
If a young person has done well in school, maintained at least a “B” average, an excels in certain areas, have them fill out an application for scholarships before applying for a loan.
There’s a lot of talk about wishing college was free to everyone. That’s impossible in the real world because no professors or school administrators will work for free. However, it can be free to some students who have properly applied themselves and have put extra effort into their career.
These students are not getting something for free. Instead, they are being rewarded for their hard work during their high school years and it takes the financial burden off of their parents for at least a good part of their college career.
If a young person does not qualify for a scholarship, that’s okay! There are plenty of other opportunities to save money if they need to borrow money to go to school.
What to Focus On
The best way to save money on student loans is to start a savings plan for their tuition and put away money each month as you can afford it. Then use this “nest egg” to pay off the loan early once they have graduated from school.
Better yet, start paying some of the payments while they are still in school. Some student loans, such as the Parent PLUS loans, ask you to pay the first payments this way so that they have some assurance that you will pay the balance over time.
Saving money on student loans involves getting the lowest interest rate possible or lowering the amount of time needed to pay it back. Of course, obtaining grants or scholarships helps as well.
There are also work-study programs that you can participate in to cut down costs. Engaging in a work-study program allows students to work while they are going to school. The money they make goes to tuition but is normally paid directly to students.
So start a savings account that is dedicated to a young person’s tuition and school expenses, pay it off as early as possible once payments begin, and try to find the loan with the best interest rate. These are the best ways to save money on student loans.