Understand all the ways you can get financial aid to pay for college, plus tips for managing student loan debt. Get the Money Girl Book at http://MoneyGirlBook.com
Money Girl
359 MG How to Get a Student Loan to Pay for College (Part 2)
(upbeat music) - Hi everyone, I'm Laura Adams, author of the award-winning book, "Money Girl Smart Moods to Grow Rich," available in paperback at your favorite bookseller. This is the second episode in a two-part series inspired by a question from an anonymous "Money Girl" podcast listener. He or she asks, "I plan to go to college "and then to a two-year graduate program. "What are the different types of student loans "and aid that I can apply for? "Plus, what tips do you have "to make education debt easier to bear?" Getting a college education can be difficult, especially when you don't have enough income or savings to pay for it. In part one, I discuss the main types of student financial aid that come from the federal government. In this final episode, we'll cover five non-federal aid options, plus tips for managing student loan debt. (silence) The types of federal student aid that I covered in part one include grants, work-study programs, and loans. But there are even more ways students can get financial help to pay for college. These include five main sources of non-federal student aid. They include state government aid, school aid, scholarships, private loans, and peer-to-peer loans. We'll cover each of these. So the first is state government financial aid. This is available from just about every state's education department. Most states have at least one grant or scholarship for residents, and many states have a long list of student aid programs. Eligibility is typically limited to residents who attend a school in their home state. However, that's not always the case. Many states have programs that allow you to attend a university in another state without having to pay expensive out-of-state tuition. These are called Tuition Exchange or Reciprocity Programs, and they can save you a bundle. To find out what's available in your state and how to apply, visit the National Association of Student Financial Aid and Administration's website at NASFAA.org. They have an interactive map where you can click on your state and learn more. And by the way, don't worry about writing down the resources that I give you in this podcast. You can find them all in the transcript for this show on the Money Girl page at quickanddirtytips.com. The second type of aid is school financial aid. This may be available from the colleges, universities, or vocational schools that you're interested in attending. You might recall from part one of this series that schools use the information from your FAFSA application to determine your eligibility for federal grants, work study, or loans. The administrators in the financial aid office of your school should become your new best friends. Financial aid officers have a lot of experience, and it's their job to help you succeed using appropriate financial resources. Ask aid administrators questions like, "What types of financial aid am I eligible for? How much financial aid could I receive? What are the aid application deadlines? And when should I expect to receive aid?" Once you've applied, if you don't receive a financial aid package that you believe is right for your circumstances, let your school know. You may be able to appeal the decision by requesting that the financial aid officer review your situation more closely. The third type of aid are scholarships. These are types of financial aid that typically don't have to be paid back. Hundreds of thousands of them are awarded to students with special qualifications each year. But don't assume that you have to be a straight-A student to qualify. In addition to academic achievement, scholarships can be based on factors such as financial need, community service, athletic ability, artistic talent, field of study, where you live, having a disability, or your ethnicity. Scholarships come from a variety of sources, such as states, local governments, community organizations, private employers, high schools, and industry associations. Some may use the FAFSA, but most will require you to complete their own forms to determine eligibility. Use a site like fastweb.com that compares your background with a database of potential scholarship awards. The fourth type are private loans. These are available from a variety of lending institutions to foot the bill for college expenses. However, in part one of this series, I mentioned that getting loans for college should be your last resort. If you must take an education loan, my best advice is to always borrow from the federal government first. That's because federal loans offer more advantages than private loans, such as low fixed interest rates, not having to make payments until after graduation, and flexible repayment options. Additionally, approval and the interest rate you're offered for a private loan will depend on your credit. If you're too young to have a good credit history, you'll have to convince a co-signer who does have good credit to apply with you. And the fifth type are peer-to-peer loans or P2P loans. They're made using online lending platforms that bring lenders and borrowers together. I love learning and anything that makes learning easier. If you're a parent and your child needs some homework help, then IXL is a right for your family. IXL is an online learning program for kids covering math, language arts, science, and social studies. IXL has interactive practice problems for topics from pre-K to 12th grade and everything is organized by grade and subject. As kids practice, they get positive feedback, awards, and explanations for wrong answers. IXL figures out what your kids need more help with and recommends more topics to practice. Their videos, lessons, sample problems, and learning games too. One subscription to IXL gets you all subjects and all grade levels. Membership started just $9.95 a month. It's no wonder IXL is used in 95 of the top 100 school districts. I think the positive feedback that IXL gives is really crucial when it comes to learning. So make an impact on your child's learning. Get IXL now, and money girl listeners can get an exclusive 20% off IXL membership when they sign up today at ixl.com/moneygirl. Visit ixl.com/moneygirl to get the most effective learning program out there at the best price. You can get peer to peer loans at sites like prosper.com and lendingclub.com. They match up investors who want to earn interest with appropriate risk borrowers. Most P2P sites do consider borrowers credit histories when assigning the interest rate on a loan. For instance, if you have good credit, you could qualify for an unsecured loan that charges as little as 6.73% annual interest right now. Taking on loans for education is a big commitment because it's a debt you'll owe even if you don't complete school or can't find a job. So be sure you consider getting student loans only after you've researched all the free sources of aid, including grants, scholarships, and work study programs that I've covered in this series. Make sure you understand your loan's repayment terms and options, especially if you experience a financial hardship. Always communicate with your lender about any challenges you face that could affect your ability to make payments on time. If you're not sure who services your federal student loan or grant, use the National Student Loan Data System. It's a database at nslds.edu.gov or contact your school for more information. And a final quick and dirty tip is to take advantage of tax breaks for education debt, which can reduce the net cost. If you haven't already signed up for the free Money Girl newsletter or connected on social media, what are you waiting for? When you visit the Money Girl page at quickanddirtytips.com, you can also read a transcript of this show and see all the resources and links that I've mentioned. It's episode number 359, called How to Get a Student Loan to Pay for College Part Two. I'm glad you're listening. Tchang. That's all for now. Courtesy of Money Girl, your guide to a richer life. [MUSIC PLAYING] (upbeat music) [BLANK_AUDIO]