Question

One of the largest, and most expensive, factors in deciding on what college to attend is how to pay for it. In recent years, the cost of college has steadily increased which has put a strain on students to finance their education. Because of higher cost of education, students and parents have become more creative in planning for college.

Explain options available to finance a college education and include scholarships, grants, federal aid, and loans in your discussion. What advice would you give to someone who is about to start his/her college education? How much loans should one get? How should paying for college education be part pf one’s financial plans?

Answer 1

College fees are increasing year by year. This put a strain in a lot of students and the parents, as in today's scenario there is no guarantee that one will find a job directly by passing out from the college, hence paying interest on the huge educational debt will be a herculan task. This can be seen in bad debt nos of the banks. Educational Loan Defaults are also rising. So what can be done under this scenario?

There are a various option available to finance the education some of the options are

Scholarship: If one is good in academic then the best option is to apply for the scholarship. This will reduce the burden of paying educational fees

But if one is an average student then he/she will not get grant or scholarship in such cases loans are the available instrument to finance.

Advice to someone who will be starting the college education will be to get half of the educational loans and half financing should be through personal savings as this will reduce the burden of paying installment after passing out of college.

First and the foremost planning after passing out of college should be get rid of educational loan so payment of educational loan should be the first priority anything else can wait for eg buying a car or a house or expensive luxury. Debt should be always paid first.