Money Smart Teen Topic

College Prep

College Funding

It is more important than ever to make wise decisions about financing college and continuing education, especially as the cost of post secondary education continues to increase.

Whether you are planning to attend college, are currently a student or already have student loans, below are tools and resources to help you along the way.

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Scholarships – Show Me the Money!

There are federal student loans and private loans. Federal student loans often have lower interest rates and are more common. Additionally, some federal loans cover the cost of your interest while you are in school, also called subsidized loans. Most private loans are offered by financial institutions and have variable interest rates, as high as 16% recently. Repayment options tend to be more varied for federal loans.

Choose the loan that is right for you! Learn about which one to seek first, plus the benefits and risks of both at: Consumer Financial Protection Bureau: Paying for College – Choosing a Loan

Yes, many students borrow private and federal loans.

  • Search for scholarships.
  • Look at ways to cut costs.
  • Find out what your family can contribute. Your parents may be able to get tax credits for their contributions and can also explore Direct PLUS loans.
  • Shop around for a private loan and remember to look for the lowest interest rates. Generally, you  should turn to private loans after you have explored all other grant, scholarship, and federal loan options.
  • Scholarship Opportunities – Research available scholarships for you through the Greater Kansas City Community Foundation
  • Fast Web – Create a profile using this online resource to find scholarship opportunities tailored to you

The government pays the interest on subsidized loans while you are in school and you pay the interest on unsubsidized loans. Subsidized loans are based on financial need.

Congress can change federal student loan rates; however, your rate remains the same once you agree to a federal student loan until it is paid off. Interest rates on private loans are determined by the lender based on your creditworthiness.

You should not replace student loan debt with credit card debt because it can make your education costs much more expensive with the compound interest and higher interest rates.

Contact your lender immediately and ask for alternative repayment options, such as a temporary suspension or reduced payments. You might also ask about forbearance or deferment options.

A deferment is a temporary pause in your student loan payments due to active military service and/or reenrollment in school. Forbearance is a temporary reduction or suspension in your payments based on job loss, illness, injury, etc. Your lender will assess your circumstances and provide available options.

The Federal Student Aid site, studentaid.ed.gov, has an easy to read chart explaining Direct Loan and FFEL Program Repayment Plans. This includes:

  • Repayment Plan
  • Eligible Loans
  • Monthly Payment and Time Frame
  • Eligibility and Other Information