RESTON, Va., April 13 /PRNewswire/ -- A college education is an investment that creates an abundance of personal and professional rewards over one's lifetime.
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When it comes to paying for college, roughly two-thirds of students look to low-cost student loans. Federal student loans, like those offered by Sallie Mae, are the most common way for students to finance their education.
"Students should first consult with their financial aid office for recommendations on student loan options and lenders," says Martha Holler, a spokesperson for Sallie Mae, the nation's leading provider of education funding. "Most offer a list of lenders they recommend to their students as offering excellent rates and terms; providing excellent customer service; and extending attractive loan benefits and discounts."
According to the U.S. Census Bureau, in terms of today's dollars, college graduates will earn an average of about $2.5 million, or about $1 million more over their working lives than high school graduates. For graduates who go on to earn advanced degrees, the earnings premium increases to about $1.4 million.
Federal student loans are available on both a financial need and non-need basis. And while these loans typically have borrowing limits, they offer the most attractive terms; lower interest rates, subsidized interest in certain cases; the ability to postpone making payments, longer repayment terms; and less stringent credit requirements.
Some lenders also offer borrower benefits in the form of fee or interest- rate reductions. Sallie Mae, for example, will pay the 2-percent origination fee on a borrower's behalf for loans taken out next year. Zero origination fees provide students more money up front, so that students who borrow to pay for college have more money to cover education expenses, with each borrowed dollar directed toward education and not interest. In addition to the zero origination fee benefit, borrowers also may be eligible for a variety of borrower benefit programs, such as loan balance reductions for on-time payment.
PLUS Loans also are an option for students. A PLUS Loan is a low-interest federally funded loan for credit-worthy parents of undergraduate, dependent students as well as for graduate and professional students. The PLUS Loan will cover the entire cost of education, including books and living expenses.
Private loans are yet another funding source for students and families. Students always should maximize federal loans offerings before investigating other forms of alternative funding. Private loans are designed to supplement federal loan programs and are available from schools, banks, and education loan organizations. The terms of these loans vary based on the lender and the credit history of the borrower or co-borrower.
Sallie Mae's "How to Pay for College: A Practical Guide for Families" also offers detailed insight on selecting a student loan. Written in collaboration with financial aid administrators, the book devotes several chapters on exploring student loan options and tips on successful repayment.
"Loans should be taken out after a student has fully exhausted other options, such as grants and scholarships, that do not need to be repaid," adds Holler. "The bottom line is that there are several low-cost options for students and their parents to cover the cost of college."
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