Student Loans 101 for Parents & Students
What to Know Before Applying for Student Loans
If you have a child in school, it is never too early to start thinking about college and how to pay for this expensive investment in your child’s future. Students loans are a reliable means to do just that but navigating the world of college financial aid can be a confusing and frustrating task for both students and parents alike.
With the cost of higher education continuing to rise, understanding the basics of student loans and the importance of the Free Application for Federal Student Aid (FAFSA®), is crucial.
Understanding the FAFSA
Completing the FAFSA is the first step in the financial aid process for any student seeking financial support for their education. This is essential for determining eligibility for federal student loans, which often offer lower interest rates and more flexible repayment options than private alternatives. The information provided on the FAFSA is used to calculate your Expected Family Contribution (EFC), which colleges then use to determine your financial aid package.
The FAFSA opens the door to loans as well as grants, work-study programs, and even some state and school-based aid. It's important to submit the FAFSA as early as possible because many forms of aid are awarded on a first-come, first-served basis. Even if you believe you might not qualify for financial aid, submitting the FAFSA can sometimes provide unexpected opportunities for support.
Federal vs. Private Student Loans
When it comes to student loans, there are two main types: federal and private. Federal student loans are funded by the government and offer a range of benefits, including fixed interest rates, income-driven repayment plans, and options for deferment or forbearance during financial hardships. Federal loans also offer forgiveness programs under certain conditions, such as public service work.
On the other hand, private student loans are offered by banks and other financial institutions. They can be a helpful resource to fill the gap between federal loans and the total cost of education. However, private loans may come with variable interest rates, which can increase over time. It's important to compare the terms, conditions, and borrower protections of each loan type before making a decision.
Before applying for any loan, consider the total cost of your education and borrow only what is necessary. Remember, student loans must be repaid, and the amount you borrow now will affect your financial future.
VCNB Is The Route To College Ave®
Planning for higher education and navigating the maze of student loans can be overwhelming, but you don't have to do it alone. VCNB has partnered with College Ave Student Loans to provide private financing options. College Ave offers undergraduate, graduate, parent and refinance loans. Whether you’re a college student, college graduate or the parent of a college student, we’ll help you find the best loan with a three-minute application, instant credit decision and no fees to apply. Click this link to learn more about College Avenue through VCNB.