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It's time to start thinking about college. In most high schools, 11th and 12th-grade students get college preparation courses and coaching. Your family may have started a college fund, but you are most likely going to have to take out some student loans to cover what your savings don't. Research and studies have shown that over 60 percent of all students that graduate from college will begin their careers in student loan debt. The average rate for defaulting on these loans is over 11 percent. This can have a huge impact and potentially cripple a young person just out of school. This article will go over the average cost of both public and private colleges, as well as four years and two-year schools. We'll touch on the cost of in state and out of state tuition, and what makes up the average cost per semester. We'll talk about the different types of loans that are available and how to apply for those, as well as alternative programs to look into to avoid taking out so many loans.
Public Two Year College - In State
A public two-year college is going to be one of your most inexpensive options. If the college is in your state, you won't get hit with out of state fees and added costs. The average yearly cost for a public two-year college is $3,500 to $4,000. This price includes courses, books, and miscellaneous expenses. There is usually no on campus housing, so this reduces the cost.
Public Four Year College - In State
A public four-year college is less expensive, but there is room and board added on. Most four-year colleges require you to live on campus for at least the first two years out of the four. The average cost of a public four-year college is $20,000 per year. This cost includes books, food, room and board, and courses.
Public Two Year College - Out of State
If you're looking for a school that is in another state, be aware that the admissions price will be higher. Most two year colleges don't have a huge difference in their in state and out of state admissions price. Two-year colleges are competing for students, and most students choose to stay in their states to attend a two-year college.
Public Four Year College - Out of State
Public universities are funded by the taxpayers who live in the state's tax dollars. So it's only fair that out of state students aren't entitled to this lower rate. The price can be a little higher, or it can be almost double the in state student cost. It all depends on which university you plan to attend. On average, the out of state tuition is around $35,000 per year.
Private Two Year College
Private colleges are generally more expensive than your two or four-year public colleges. They can be more selective to which students they admit, and they can also have higher admission standards. The average cost for a private two-year college is $24,000 annually.
Private Four Year College
A private four-year college will cost around $38,000 per year. This expense covers room and board, meals, books, classes, and lab fees. Private colleges are found in every state, and there is usually a more rigorous application process. There also may be more costs associated with the admissions process.
Several factors come into play when college costs are calculated. They could be things the college charges you for, as well as things they estimate that will be a personal cost to you like transportation.
If you're beginning to look into student loans, the first thing you should do is shop around. There are many types of student loans available, and each one has their own sets of guidelines. This section will go over several different types of loans, along with how you apply for them and their eligibility requirements.
Parent PLUS Loan
Parent PLUS Loans are given to the parents of either undergrad or graduate students to help with college costs. Borrowers usually delay paying anything until the post-graduate six month grace period is up, and there is a low 7.9 percent interest rate attached. These loans are typically repaid over a period of ten years, and the interest is fixed. There is a four percent fee each time this loan is taken out as well. Unlike the other loans on the list, there is no maximum amount you can borrow with this loan, as long as it covers tuition costs.
A Perkins Loan is a Federal loan that is offered to students who have shown to have larger than average financial hardships. These loans are all subsidized, and this means you pay nothing until you graduate, and there is a nine month grace period after that as well. They have a fixed interest rate of around 5 percent and a ten-year repayment plan. As an undergraduate, you may only borrow $5,500 per year, and not exceed the $27,500 cap. A graduate can borrow up to $8,000 per year, and combined you can't borrow more than $60,000. This loan is also one of the most famous for loan forgiveness. If you're having trouble paying it back and meet certain criteria, your debt may be wiped out.
One of the most common types of loan is the Stafford Loan Program. The funding from these loans come straight from the Federal Government from the Federal Direct Student Loan Program. The Stafford Loan program is divided into two main areas: Subsidized Stafford Loan, and Unsubsidized Stafford Loans.
As you begin to apply for loans to assist you with your college tuition costs, some tools and applications will guide you through this process.
FAFSA. The biggest tool you'll have to help you in the application process is the FAFSA or Federal Application for Student Aid. This is how you will apply for any of the loans that are listed above, and there is a lot of helpful information on the website like important deadlines and a college cost sheet. To begin the process of filling out this form, you will need documents from the adults of the household that shows their combined annual income, along with their full names and social security numbers. You will also need current addresses and phone numbers, as well as the school code you would like the aid sent too. The application process will guide you step by step, and once you submit it, you will receive a letter in the mail asking you to accept the loan amounts, along with how much your school will cost. The total will be applied to your tuition costs, and anything left over will be deposited in your bank account for extra expenses you may run into.
College Savings Calculator. The second tool that will help you estimate costs for college is the college savings calculator at the top of this page. This calculator is for parents who want to plan for a college savings fund for their children, and the earlier they start doing this, the better off they will be. You can add in any relevant information like your child's current age, the amount you plan to deposit monthly, and costs of tuition with inflation. This calculator will tell you how much you should be putting away each month to cover as much of the tuition costs as possible.
If you decide you can't make your payments and just let them go, you'll be in danger of defaulting on the loans. As of 2017, one in six student loan borrowers has defaulted on their loans, and not made a payment in over nine months. If your loans go into default, it can be tough to pay them off. Remember, interest is adding on the entire time, whether you're paying on them or not. This will make your overall debt larger, and you'll be paying it back over a longer period. Your credit score will also take a hit. Each student loan you have reports to all three major credit bureaus, and if you miss payments or fall behind, this will show up on your credit report. If lenders see this, they will be less likely to give you a line of credit like a loan or even a mortgage.
Taxes & Wage Garnishment
Almost all of your student loans come from the Federal Government, and this means they have the ability to interfere with your tax refund and wages. They may impose a wage garnishment if you don't make an effort to get current with your loans. They could also take any Federal tax refund you might be anticipating come tax season.
The first thing you should do is call the lender your loan came through. They will be able to look in your records and suggest options to help you.
Residential Advisor. One of the biggest costs for college is room and board. There is a program you can sign up for where you act as your floor's RA or Residential Advisor. You are the person people come to with disputes or issues relating to their housing situation. You also monitor for illegal substances and bad behavior. There is an extensive training process, and you're expected to be on hand a lot, but the payoff is worth it. You get discounted or free room and board, along with experience and a boost to your resume.
Grants and Scholarships. If you don't want to take out many loans, look into scholarship and grant options. You won't have to pay these back, and you want to qualify for them early. Most of these need an essay on why they should choose you, along with certain criteria you must meet to be eligible. If you get a few of these, it will cut down on your student loan costs.
This article has gone over different types of student loans along with tools and tips for applying. It also touched on various repayment plans, and what to do if you get into trouble paying them back. We talked about grants, scholarships, and college positions that can help you cut the cost of your tuition, and graduate as debt free as possible. If you take the advice listed in this article and research on your own, you should be able to graduate college with minimal student loan debt.