Paying for College

As the ongoing financial crisis puts more and more student loan companies out of business, it’s important for students and parents not to panic. There are some basic facts that every family searching for college financing should remember.

First, always look for free money first - that means look for scholarships and grants. There are a number of reputable scholarship search engines available to students including fastweb.com and scholarships.com.

Second, pursue federal student loans. Federal student loans are guaranteed and subsidized by the federal government and, as a result, are generally more affordable than private student loans. While many federal student loan companies have ceased operations in the past few months, including College Loan Corporation, there are still hundreds of lenders offering federal student loans. Some press accounts seem to indicate there is a panic in the student loan business, these challenging times for some lenders will not likely affect the ability of students to access low-cost federal student loans.

Finally, if scholarships and federal student loans are not enough, consider private student loans. The financial crisis is affecting a lot of private student loan providers, so while there are fewer loan options, there are still quality providers. Be careful, though, as there are number of payday loan providers advertising to students. Payday loans are not private student loans, and they are not structured specifically to help families afford education. Worse yet, payday loans carry tremendously high interest rates and are meant to help cash-strapped individuals with very short-term liquidity needs.

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