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An insider’s guide on saving for college education for your children

September 14,2011 by: Dallas Browne

College expenses go beyond tuition fees. Usually, the added costs include boarding and lodging, transportation, text books, supplies and miscellaneous expenses. The college overall cost embodied by the above mentioned categories varies across types of institution – public, private, or degree programmes – 2/4 years, also if the student attends college within or outside the home state. According to a latest survey conducted by College Board, it has been found that 67% of the total college education expenses constitute the tuition fee.

In order to continue pursuing the expensive college education, the federal and state governments including banks and financial institution offer students several different varieties of grants, loans and scholarship programs. According to another survey, parents tend to pay 48% of the total cost of the education, while 33% is left for the students to pay. About 15% of payment for college education is obtained from grant and scholarship programs, while the remaining is a joint effort from family, friends and relatives.

That said loans for education are actively sought by parents to further their children’s brighter prospects. Both federal and state governments are more than happy to distribute loans and grants to deserving candidates. Today, these loans are offered at fixed rates and they are expected to reduce as low as 3.4% in the near future. Further, the limit of borrowing has seen a raise from earlier times. All this relates to easier and stress-free pursuing of college education.  With renowned grants like Pell Grant, 529 Savings Plan and Stafford Loan you need not worry anymore for your ward’s education.

On the flip side, private student loans are tougher to obtain. However, if the borrowed loan amount is between$5,500 and $7,500 you would certainly try to obtain private student loan. The loan is available at variable rates and the lenders demand a high credit score to offer the loan. Further, a co-signer is required even if the score is 620 FICO. Upon qualifying for this type of loan you must be careful not to borrow loan amount that becomes difficult to repay. This loan is not capped and therefore is not available on forgiveness, rather is based on income-based repayment option.

Avoid being fooled by private lenders who are eager to loan you hefty amounts that you cane ever repay, comfortably. Since student’s loan cannot be settled in court, hence, there is no limit to what lengths and time the moneylenders can pursue you for collection. We advise you to stretch as much as you can without pinching your pockets, when the time comes to repay the loan.

Consolidating education loans is though a good option to erase the multiple loans borrowed for education, yet the payments over elongated period of 30 years end up far expensive than your original loan. Also, if you have little amount and time period left to repay the loan, it is no use consolidating the loan, because you pay far more than you expect.

You must seek the help of Internet to read about the various types of loan available for college education, take your pick and contact your state government to discuss the matter further.

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