For Colorado families with college-age students, the question of how to pay for higher education expenses is likely weighing heavily. Decisions about financing college, from tuition to living expenses, shouldn’t be taken lightly, because they can impact students and their families for many years.
College requires not just academic preparation, it also pays to study personal financial issues.
Student loans — which can fill gaps not covered by a family’s financial resources and other aid — deserve special consideration. While many people are appropriately hesitant to take on debt, a student loan can be an investment, as college degrees on average translate into substantially higher salaries. A key, however, is being a smart borrower and only borrowing what you need.
Like all investments, it pays to do some research before you jump into paying for college. Take into consideration how much you need to borrow, and how much you expect you’ll be able to pay back once you complete your education. This can help you avoid financial distress further down the road.
Here are some basic things to keep in mind:
• Complete the Free Application for Federal Student Aid (FAFSA), the first step in applying for financial aid. The FAFSA will enable you to apply for federal loans, grants, work study and even many scholarships.
• Exhaust scholarship opportunities and other types of aid that do not need to be paid back before taking on a student loan.
• Always borrow your full federal loan allowance before looking to private or alternative loans. Federal loans carry special terms and lower interest rates than most private loans.
• Estimate what your future loan payments will be and how easy they will be to meet based on your anticipated salary from your future occupation. An easy-to-use online tool called the SLOPE calculator is available to help you do this, at . Just click on the “Pay” tab and then “Available Tools” to find the SLOPE calculator.
• Be savvy with your spending in college. Determine what you need versus what you want and spend accordingly.
• Avoid seemingly attractive credit card offers. Federal student loans offer better terms and should be considered first.
• Don’t forget that you must repay your loan even if you don’t complete your education.
CollegeInvest, a not-for-profit division of the Colorado Department of Higher Education, is a good place for families to start learning about these complex issues.
The bottom line is that Colorado families will find it pays off to do their homework when considering how to pay for higher education expenses.
For more information about CollegeInvest and paying for college, go to ., or ., the website of the Education Finance Council.
Debra DeMuth is director of CollegeInvest, which serves as the state’s not-for-profit higher education financing resource.
