Everything You Need to Know About Student Loans

More American families are borrowing for college. At the same time, merit aid and the use of personal income and savings is falling.

That’s according to an annual College Ave Student Loans survey of college students at four-year universities, conducted with Barnes & Noble College Insights. The survey also found college affordability is top-of-mind for the majority of students (57%). Despite financial concerns, 81% of students

report that a college degree is crucial for their future.

To borrow smart for college this fall, consider these tips and insights:

Exhaust All Options - Before turning to private student loans, first exhaust other sources of financial aid. Complete and submit the Free Application for Federal Student Aid to be considered for grants, scholarships, work-study programs and federal student loans. If your selected school is one of the 400 institutions that requires the CSS profile, submit that too to qualify for institutional aid. Finally, search for private scholarships offered by companies and non-profit organizations. One easy one to apply for is the College Ave $1,000 monthly scholarship sweepstakes.

If you do need to borrow, turn to federal student loans in the student’s name first, which generally offer the lowest rates and come with additional benefits. They don’t depend on credit scores, and offer longer deferments and forbearances, income-driven repayment plans and student loan forgiveness.

Private Student Loans - Federal student loans have annual and aggregate loan limits. If you find yourself needing to borrow parent or private loans to cover remaining costs, consider these factors:

• Costs: Compare costs of different loans by looking at the actual interest rate you’ll be charged, not the lowest advertised rate. Understand the difference between variable and fixed interest rates, and be aware of any fees and available discounts, such as those offered for using autopay.

• Cosigners: A creditworthy cosigner doesn’t just increase the odds of loan approval, even if the student can qualify on their own, cosigning may yield a lower interest rate, reducing the overall cost of the loan.

• Total Debt: Borrow only what you need. With private loans, you can usually borrow up to the total cost of attendance. However, borrowing less than the maximum can help you save over time. A simple rule of thumb you can use to determine how much student loan debt you can afford: If total student loan debt at graduation, including federal and private loans, is less than the student’s annual starting salary, you can likely repay the loans in 10 years or less.

• Repayment: Look for repayment flexibility to match your needs. For

example, College Ave Student Loans offers 5-, 8-, 10- and 15-year repayment options, along with the choice of deferring payments until after graduation or beginning payments right away.

No matter what option you select, understand the terms.

For more resources, including an online student loan calculator, and to learn more about paying for college, visit CollegeAve.com.