Financial Know-How for New College Students

If you are a prospective college student or already in college, you should know that there is a whole industry out there waiting to take your money. As a new college student, it is important that you pay close attention to how your money is being spent.

It can be very easy to lose track of your money, especially with the stress of being on your own for the first time. Here are some tips for gaining financial know-how if you are a new college student.

New College Students – Know that You Are a Target

If you are a new college student, you should know that there are a lot of people out there who think you are an easy target. Credit card companies, private lenders, cell phone companies, and yes, even booksellers, all roll out promotions and advertisements in the hopes of catching the attention of young college students.

Walk through any college or university during the first week of classes and you are bound to come across dozens of tables set out to get college students attention. Know that these companies are relying on your financial inexperience. Watch out for promotions that seem too good to be true. They probably are.

High Interest Credit Cards – The Bane of the New College Student’s Existence

What is perhaps the most important thing to remember if you are a new college student when it comes to taking charge of your finances? Credit cards, or perhaps more specifically, high interest credit cards.

Did you know that credit card companies will specifically target college populations? Credit card companies are well known for drawing in college populations with promotions, maybe a college sweater or gift card, and with their promotional annual percentage rates. Note the word ‘promotional’.

That means that what seems like a very good interest rate may only last you for a few months, and then the credit card takes on much higher interest rates. Be very wary of so-called student credit cards with promotional low interest rates. Read the fine print very carefully, and never sign up for a credit card just because of the cool promotional gift. It could end up costing you hundreds of dollars!

Making Sense of Your Financial Aid Package

Financial aid packages can definitely be confusing. There are subsidized student loans, unsubsidized student loans, work-study funds, grants, and scholarships. When it comes to understanding your financial aid package, it can be tough to crack the jargon that usually accompanies most of these packages.

Let’s tackle one of the most confusing aspects: the difference between subsidized and unsubsidized student loans. On the whole, subsidized federal student loans are the most desirable. These allow you to lock in low interest rates, and do not begin to calculate interest until after you graduate.

Visit Your College’s Financial Aid Office

It happens to almost every college student. Inevitably, there will be a problem with your financial aid package, there will be a problem with your financial aid funds, you will be asked to turn in supplemental forms, or you will simply not understand part of your package and you will want to ask a question.

By all means, try to ask any questions you may have about your financial aid package before school starts. You don’t want to have to stand in the mile long line that trails out of the financial aid office on the first few days of school across every college campus in the United States.

If you have to stand in line, try to get there first thing in the morning, even if it means dragging yourself out of bed. Also, make sure you bring every piece of information you may need, including any forms, correspondence, and tax forms that you may be asked for.

Getting Past Contribution Limits for 529 College Savings Plans

There are a few major investments that almost every family faces – cars, homes, and of course, college educations for the children. The importance of having a college degree seems to grow every day, but unfortunately, the cost of attending college seems to grow right along with it.

In fact, the cost of attending college is downright prohibitive for some families, and there is no reason to think that this situation will improve any time soon, and every reason to think it will actually get worse. What can you do if money is tight, but you want your child to have access to an education that will help them succeed in the job market?

Scholarships and grants help some families, but they seldom foot the entire bill, and student loans can be an expensive burden to saddle onto your child on graduation day. Another problem with all of these college funding options as well is that it is impossible for you to know if you are getting them until your child is actually ready to enter college.

You can’t wait that long to plan for education financing if you want your child to be able to attend the college of their choice. So, what is a hard working family to do to ensure that they will have the money to put their kids through school? A 529 savings plan can be a great option.

A 529 savings plan is a state run savings account that lets you save money for your child’s education and gives you a tax break for doing so. Anyone can contribute to your 529 savings plan, so if grandparents and the extended family want to help save, they can do so.

Some 529 savings plans function just like normal saving accounts, while others pre-paid accounts for schools that let you pay the tuition of a college in advance.

The idea is that the price you pay today will be significantly cheaper than the price you would pay by the time your child is old enough to attend that school (of course, then you have to hope they want to go there!). These savings accounts allow you to grow your money faster by investing it in the stock and bond market as well.

There is a drawback to these 529 college savings plans, however, and that is the contribution limit. Each state comes up with its own contribution limit, but they generally range from $100,000 to $200,000 per family. That may sound like a lot of money, but is it really?

Would it be enough if your child wanted to attend an Ivy League or private university? Would it be enough to give several children room, board, books, and tuition at even a public state school? If you are facing either of these scenarios, you need to find a way around the contribution limit on these accounts. There are a few things you can do.

You can have relatives set up separate accounts instead of contributing to your account, and you can have accounts in multiple states. You can put your money into different types of accounts – one pre-paid and one savings – for your children. You can also have each parent start an account, if they are unmarried.

The most important thing to remember about starting all of these accounts and getting around the contribution limit is that you will need to understand the tax implications for each account. If you have accounts in different states, each state’s own tax laws will apply to each account.

Each account holder will be responsible for reporting contributions to their own account. All of this extra work may be worth it in the long run, though, so your child does not have to worry about finances will working on their degree.

Wading Through the Financial Aid Options for College Students

The world of financial aid is often one of the most dreaded parts of getting ready to go off to college. Unless you have been offered a full tuition scholarship well ahead of graduation, chances are you will have to do the work of getting financial aid to fund your college years.

Financial aid can definitely be one of the more confusing aspects of going to college. Here are some tips to help you wade through the financial aid options for college students.

Your First Stop – Fill out the FAFSA Form

What is the FAFAS form? As most college students know, the FAFSA should be your first stop on the road to securing financing for your college years. The FAFSA form is the Free Application for Federal Student Aid. It is a federal form that you should fill out roughly a year before you plan to attend college or university.

The FAFSA form will ask you for personal information and information about your family’s income. By filling out the FAFSA in a timely manner, you automatically become eligible for federal student aid, which may include Pell Grants (aka, free money), subsidized student loans, unsubsidized student loans, and financial aid in the form of work-study funds. Pick up the FAFSA form at your local library or college financial aid office. You can even fill out the FAFSA form online.

Seeking Out Private Funding Sources

Another very popular option is to seek out financial aid in the form of private funding sources. Private funding may mean seeking out scholarship assistance from private companies, which can range from the local supermarket chain to a major bank corporation.

Most of these private funding sources require that apply with them directly for a scholarship contest of some kind, which may include an essay competition or simply an application with reference letters. Make sure to follow directions carefully, as each company has different rules and regulations.

Work Your Way to a College Degree – Taking Advantage of Employer Tuition Assistance

Many employers offer tuition assistance as part of your benefits package. Every employer is different, so ask your human resources representative if you think that they may be able to help you with tuition. If you are unemployed and looking for a job, consider seeking out employers who offer tuition assistance as part of their benefits package.

Seek Out Specialty Scholarships

Before you go the route of private lending, make sure to put your best effort forth when it comes to finding suitable scholarship opportunities. Just because you didn’t make straight A’s in high school does not mean that you are not scholarship material.

There are many specialty scholarships out there that target specific majors and industry. Consult the thickest scholarship finding guide you can find for opportunities that suit your situation.

Your Last Stop – The Private Loan Industry

Finding money for your college years is always difficult if you or your parents do not happen to be independently wealthy. However, there are many options available for those who can’t get their hands on a full tuition scholarship, federal, private, or otherwise.

There is a growing private loan industry that is now making many loans available for families and college students. However, if like many college students, you find yourself having to take out a large loan to pay for your studies, you will need to do some serious interest rate shopping.

Always opt for a federal subsidized student loan if possible, as these usually lock in a low interest rate and offer the best rates. However, if this is not possible, shop around with different lenders to find the one with the lowest interest rate and with the most flexibility. Make sure to read all the fine print.

Funding Options for College Bound Students

With so many funding options for college bound students, which one is best for you? Paying for college may be the largest expense a family can have, especially for families with multiple children. There are so many funding options to assist you. Here are some brief descriptions of your options.

A Coverdell educational savings account is a popular plan for college funding. You can contribute up to $2000 per year per child. If you use these funds for qualified education expenses, the earnings are tax deferred and free of federal tax. You select the investments for optimal flexibility.

Section 529 plans are state-sponsored plans that can be used to pay college expenses. This is a tax-advantage plan for approved education-related expenses such as tuition, room and board, supplies and fees. The state generally hires an investment firm as a program manager who provides various investment choices.

You invest in the appropriate portfolios that match your investment time-line and risk tolerance. The two types of 529 plans are prepaid and savings. Prepaid plans (independent) let you purchase tuition credits at member colleges, at today’s rates, for future usage. Savings plans have growth based on the market performance of your investments.

UGMA/UTMA accounts are custodial accounts opened on behalf of a minor. This gift is considered irrevocable with all withdrawals required to be for the minors benefit. The balance of the account is turned over to the minor at the age of majority.

Grants and scholarships are “free money” options that don’t have to be paid back. This is a debt-free way to fund an education. Financial need typically must be demonstrated to receive a grant. Scholarships are usually based on merit.

Work-study programs provide part-time employment from the federal government to earn money for college. This program is not only in place to help to fund college, but a work-study job can provide essential work experience.

Federal student loans are low interest, long-term loans for students. These loans offer attractive repayment options including being able to post-pone payments while attending college and in times during repayment of financial difficulty. There are federal loans for both parents and students. The best know ones are Stafford Loans for students and PLUS for parents.

A lot of people turn to these programs for their funding needs. You can also often find private loans that have low interest rates for college students. Be sure to choose a reputable lender who in knowledgeable on loan choices if using a private lender.

Tuition payment plans are an interest and debt-free way to spread payments over several months. Not all colleges offer this plan. Typically used by families who have income that will cover the gap between the amount they are billed for college and the amount of financial aid received.

Assets of a family are often used to fund college. IRA’s, savings accounts, 401k plans and stocks offer a debt-free way to fund an education. As a word of caution, before you liquidate one of these accounts, consider the earnings you may be missing out on. Use this number as a comparison to the amount of interest you would incur from a student loan plan.

Credit cards are often a popular but poor choice for funding a college bound student. This is for the simple fact that interest rates can be high. Use this funding choice with caution.

It’s important to think about your own situation as you plan to fund your education. Establishing a savings plan at an early age will make a huge difference. There are lots of funding options for college bound students. Which one makes the most sense for you?

Federal PLUS Program Smart Move for College Funding

Under the Parents PLUS loan program, parents are able to help pay their child’s education expenses. The student must be a dependent undergraduate who is enrolled at least half time in an eligible program at an eligible school. PLUS Loans are available through the Federal Family Education Loan (FFEL) Program and the William D.

Ford Federal Direct Loan (Direct Loan) Program. Parents can get either of these loans, but cannot get both, during the same enrollment period. An acceptable credit history is a must. It is simple to apply for the Direct PLUS Loan. The student’s parent must complete a Direct PLUS Loan application and promissory note, contained in a single form that is available at any college’s financial aid office.

For the FFEL PLUS Loan, the parent has to fill out and send in the PLUS Loan application, available from the school, lender, or your state guaranty agency. After the school completes its portion of the application, it must be sent to a lender for evaluation.

A credit check will is always required, and must be passed. If the credit check is not acceptable, the parent may still be able to receive a loan if they can provide proof of a hardship, or if someone, such as a relative or friend who is able to pass the credit check, agrees to endorse the loan. An endorser promises to repay the loan if the parent fails to do so.

The parent might also qualify for a loan without passing the credit check if they can demonstrate that extenuating circumstances exist. The student and parent must also meet other general eligibility requirements for federal student financial aid. The yearly limit on a PLUS Loan is equal to the cost of attendance minus any other financial aid the student receives.

After approval, either the U.S. Department of Education (for a Direct PLUS Loan) or the parents’ lender (for a FFEL PLUS Loan) will send the loan funds to the college. The school might require the parent to endorse a disbursement check and send it back to the school. In most cases, the loan will be disbursed in at least two installments, and no installment will be greater than half the loan amount.

The funds will first be applied to the tuition, fees, room and board, and other school charges. If any loan funds remain, the parent will receive the amount as a check or in cash, unless they authorize the amount to be released to the student or to be put into the school account. Any remaining loan funds must be used for education expenses.

Federal PLUS Loans are unsubsidized loans made to parents. If the student is independent or the parents cannot get a PLUS loan, the student is eligible to borrow additional Stafford Loan funds. The interest rate for the PLUS loan is variable, but never exceeds 9 percent.

Interest rates are adjusted each year on July 1 and the parent is notified of interest rate changes throughout the life of their loan. Interest is charged on the loan from the date the first disbursement is made until the loan is paid in full. There is also a small fee charged in order to obtain the PLUS loan, which is up to 4 percent of the loan.

Repayment of the PLUS loan generally begins within 60 days after the loan is fully disbursed. There is no grace period for these loans. This means interest begins to accumulate at the time the first disbursement is made. The parent must begin repaying both principal and interest while the student is in school. There are some tax incentives available for paying back these loans.

The Scoop on Pell Grants for College Education

Paying for a college education – it’s a thought that keeps many parents up at night. After all, everyone knows that having a college education is the entrance into many good jobs and careers, and everyone also knows that the cost of getting a college education seems to be constantly increasing.

A college education can be more expensive than buying a home for some people and the cost of attending a college or university is prohibitive to some families, even though they know that giving their children the opportunity to get a college education would give their kids a leg up on the competition in the job market. The cost becomes even more overwhelming for parents who have more than one child headed to college.

There are plenty of savings plans available to families to put a little aside for their children’s college education while the kids are still in elementary school and high school, but what happens if you don’t have any money left over to put aside into a savings plan at the end of each month, or what happens if you simply didn’t save anything at all, and now the senior year of high school is upon you? Does that mean that all hope is lost?

The good news is that there are ways for students who come from families without the resources to send them to college to get a good college education anyway. The Federal Pell Grant scheme is one such program. Federal Pell Grants differ from other funding opportunities for students because they do not need to be paid back.

These grants are cash payments from the government to students who need them to pay for college, and that is the end of the story. The student does not have to work on campus to get this money and they do not have to pass a credit check, nor do their parents. Federal Pell Grants have helped millions of low income families give their children a college education.

To qualify for a Federal Pell Grant, you first have to prove that you really need one. The government will make a decision based largely on the income of the parents, but they will also consider factors like how much the school costs to attend, how many classes the student will be taking, and how long they plan to be in school.

These factors will determine not only who gets a grant but also how much money each person will get. Federal Pell Grants are distributed through the student financial aid office at each school.

Federal Pell Grants certainly have helped a tremendous number of students get an education, and they can truly be a lifesaver for a family in need, but don’t make the mistake of thinking that they can solve all of your problems. In many cases, the amount of the Pell Grant, which is awarded yearly, is much less than even tuition at the school, let alone additional costs like room, board, and books.

Some people also complain that the need based criteria of the loan is too strict and it excludes working class families who can’t afford the tuition but still make a living for themselves. Also, the system can punish a student who finds work while in school – the increased income of the student may put them out of the Pell Grant bracket.

For all of these reasons, when you’re planning your education financing, you should count on using Pell Grants only as a supplement. You should also consider work study programs at your school, federal subsidized student loans, and student loans from private sources.

Your College Loan Options for the Future

Heading off to college the first time is scary for anybody looking at the price for your college education may even scare you more. The good news is that there are many ways you can find your college education if you are willing to do your research and take the time to fill out the necessary applications.

Even if you have not saved for your college education for years, you can still go to college and find a loan that will help you get through the next few years. Here is a look at your college loan options for the future.

The Perkins Loan: If you have done your research on college loans you have probably heard of the Perkins loan. This alone is also called the Formerly National Defense Student Loan, the Perkins Loan Program and the National Direct Student Loan.

This alone is based on need and can provide you with a low interest loan to help you finance your college education. In addition, if you qualify for a Perkins loan over 1800 participating colleges will take the Perkins loan. This gives you plenty of opportunity to find a college that fits your needs.

If you are interested in taking out a needs-based college education among such as the Perkins loan, then you need to make sure that you qualify, you can do this by going online in learning more about this particular loan or speaking to your college education counselor about this loan.

Federal GRAD Plus Loan: This loan is for graduate students need financing for their graduate school. This one is also a needs-based loan and offers a low interest repayment after you have graduated. In order to qualify for this loan, you must be a citizen of the United States or an eligible noncitizen.

You also must be a student in a graduate or professional program and enrolled at least half of the time. Currently this loan has a fixed interest rate of 8.5%. The amount of money you will get when you apply for this loan will depend on your need and may vary from student to student.

You should also remember that when you take out the loan. You will not be responsible for repayment while you are in school. However it does accrue interest, while you are in school. You will be responsible for the total amount plus interest while you are repaying your loan after you have graduated.

Subsidized Stafford Loan: this loan is available to United States citizens or eligible noncitizen who are enrolled in a college program or professional program at least half of the time. The amount of loan that you will receive will depend on your financial needs.

Not everybody can qualify for this type of loan. The amount of money that you will receive with this loan is $3500 for the first year, $4500 for the second year, and for your third through fifth year in school, you can get $5500 each year.

If you are a graduate student and you qualify for this loan, you can get $8500. The interest rate on this loan is currently fixed at 6.8%. In addition, it is important to remember that your repayment schedule began six months after you graduate or, if your school enrollment drops below half-time.

You do have up to 10 years to repay this loan and extensions are granted in certain situations. There are a variety of ways to pay back this type of school loan. So you should check with your loan officer or the Internet for information about this very popular college education loan.

How Federal Work Study Programs Come into Play for College Funding

Many people going to college simply cannot afford the tuition. That is a known fact and many parents worry about how they will fund their child's college tuition and education. If you are looking in to ways to fund your college education, you have several options. There are many different types of low interest loans that you can take out, some of which are based on financial needs, while others are not.

You can also look into scholarship programs. However, many of these scholarships are very competitive and hard to come by. Another option that you have when you need to get college funding is the federal work study program. Here is some more information about how Federal work study programs can help you pay for your college education.

You may not know a lot about the federal work study programs. However, they are a great way that you can sign your college education. The federal work study program gives funds to students that can work as part-time employees at a college or university is can help you finance the costs of your college education.

In addition, many colleges and professional programs participate in the federal work study programs. There are over 3400 participating colleges and postsecondary institutions, where you can receive federal work study assistance.

When you participate in the federal work study program. Your hourly wages will not be less than the minimum wage.  The one thing to remember when looking at the federal work study program. Is that you must qualify to receive this type of help in finding your college education.

In order to determine if you qualify for this type of funding, you will be required to fill out applications that will determine your families expected contribution to your college education and your very own income as a student. If you are independent from your family than they will also look at your assets as an individual.

Furthermore, if you are dependent on your family, the application will also look at your household size and the number of people in your household attending college or postsecondary education programs. It seems like a lot, in order to qualify for the federal work study program. But this is certainly an option for many students who find that they are short when it comes to attending college.

Another great aspect of the qualifying for the federal work study program is that in many cases. You can find employment on camp this while you attend school. These jobs are generally well suited for students and can work around your course curriculum schedule. In addition, if you have declared a major or interest in a certain field of study, you can often find work study related jobs for your particular interests.

For example, if you are majoring in English, you may be able to find a work-study job working in the English department as an assistant for helping other students with their schoolwork. This is a perfect way to gain valuable work related experience or you are still attending college. It looks good on your resume and can give you experience that you need.

If you are interested in seeing if you qualify for the federal work study program, then you should speak to your counselor or financial aid officer at your university or college. You can also find a great deal of information about this particular program on the Internet. Going to college can be a little less scary when you know how you will find your education. Check into the work study program at your local university today.

Quirks about Getting Education Loans Even with a 529 College Plan

Parents who are considering investing in a 529 college savings plan should be aware that there are some quirky rules about college savings, college loans, financial aid and parental financing for college that could impact the child’s ability to pay for college and should plan their financial investments accordingly.

Parents who are trying to figure out how to maximize their college investments for their child without losing money to some of the quirky college loan rules should be aware of several different factors that affect a child’s financial aid eligibility when applying for college.

When considering which type of 529 college savings plan to invest in, parents should keep in mind that some of the quirky rules about 529 plans and college loans that could cause confusion in the future and may even work against the student by limiting or reducing the amount of financial aid they are eligible to receive from the college or university they want to attend.

Pre-paid 529 plans can be tricky when it comes to taking out college loans in addition to having a pre-paid plan. Because pre-paid plans are paid to the school the money that is pre-paid is considered, for the purposes of financial aid, to be scholarship money and the student’s “need” figure is reduced by the amount of the pre-payment.

So while the pre-paid 529 account was set up to keep tuition costs low, it can mean that the student’s financial aid will be significantly lower than it would be without the pre-paid plan meaning that large college loans at high interest rates will be necessary to make up the shortfall in tuition costs.

Since eligibility for Federal college loans that have low interest rates and flexible repayment terms is based on both financial aid and need, having a pre-paid 529 means that most students and parents won’t qualify for the Federal college loans and will have to take out private loans from banks or other lenders that may not have interest rates that are as low or reasonable repayment terms.

While parents think they are doing the right thing investing in a pre-paid 529 college savings plan they may be doing more harm than good by using a pre-paid 529 plan to save for their child’s future college education.

Keep as much money as possible in the parents’ name. Money that is set aside in the child’s name, even in a 529 account, will directly impact the amount of financial aid that the student is eligible for. A student with a large amount of money in his or her name will not qualify for much financial aid, or large student loans, so keeping the investment in the parents’ name is the best way to invest money for college.

Parents’ contributions to the student’s education are considered when making financial aid decisions but not to the same extent as the amount of money that student has available for college that is in their own name. So in order to make sure that the child receives as much financial aid from the school as possible, keep the investment in the parents’ name, not the child’s.

Parents can expect some reduction in the amount of financial aid offered to their child if they have a 529 account, but it will be only a moderate reduction compared to the drastic reduction in financial aid that would occur if the 529 account was in the child’s name.

When planning for a child’s future it’s important to be aware of all the rules regarding college savings plans and how those investments might affect the child’s financial aid eligibility in the future. It’s always a smart idea to plan ahead for a child’s college education but make sure that the investments will help the child and not their chance at getting a high quality college education in the future.