While families are advised to max out all federal student loan options, more and more students and parents are realizing that federal loans don’t cover all college expenses and are now scrambling to find the means to fill the financing gap. Less lender participation this year combined with much tougher credit restrictions for private loans leave families in a challenging position – and make clear that good credit is a MUST when it comes to applying for a loan today.
“Many families are now learning that the federal loans they received won’t cover all college expenses. The one piece of advice I give to students and parents is not to panic. Choices are available for families looking for ways to supplement borrowing options,” said Kevin Walker, CEO of SimpleTuition, Inc., a company dedicated to helping students and parents make sense of education financing choices.
Lenders are restricting both credit criteria and the schools they deem acceptable to borrowing, and credit scores are playing a much bigger role this year in the loan application process. Although access to student loans are more limited this year, there are opportunities.
SimpleTuition offers the following tips to families:
- Don’t wait until the last minute. Shop around now. There are lenders out there still making loans.
- Turn to the Web. A few established companies such as www.simpletuition.com are fast becoming valuable in the student loan search process. These online resources are objective and allow borrowers to research and compare loan options.
- Consider PLUS loans. After securing all other available federal student loan, parents should look to PLUS loans. These loans are guaranteed government loans that come with favorable repayment schedules and are for parents to pay for a child’s education.
- Research Peer to Peer lending options. These lending options allow for family and friends with a lender/institution doing the paperwork to administer the loans.
- Call your college financial aid office for more information.
- Put together a budget and only borrow what is needed.
- Evaluate work study programs.
