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Paying for College: What Are Our Options?

Scholarships, grants and federal loans should be the first financial aid options you consider for funding your student’s education, and for good reason. Scholarships and grants don’t have to be paid back, and federal loans may have a lower interest rate than private loans.

Federal student aid

If you’ve exhausted all possibilities for scholarships and grants, Federal Student Aid, which is part of the U.S. Department of Education, is the next-best option. It’s the largest provider of student financial aid in the nation and offers low fixed-interest rates, flexible repayment and deferment options, interest-rate discounts and more. Applying is easy and straightforward.

How to Apply for a Federal Student Loan


Complete the federal financial aid application.

Whether or not your student has committed to a school, obtain and complete a Free Application for Federal Student Aid (FAFSA), which determines how much your family must contribute each year for the education. If your student has decided on a school, check with the financial aid office before completing the FAFSA: some schools require students to use their applications when applying for federal loans.

The FAFSA is available:

  • From the FAFSA website
  • At your student’s high school guidance office
  • From the college your student plans to attend
  • By calling 800-433-3243


Submit the application form.

Have your student complete the FAFSA and submit it to the FAFSA processor as soon as possible. A few weeks later, your student and the schools designated on the application will receive a FAFSA Student Aid Report, which will indicate the amount your family is expected to contribute toward the education.


Review your financial aid award letter.

Your student’s college financial aid office will use the FAFSA Student Aid Report to create a custom financial aid package for your student. This information will be sent to your student in an award letter, which will specify your family’s expected contribution and the types and amounts of financial aid your student qualifies for. Your student will need to let the financial aid office know if the aid offered in the package is accepted or rejected.

The award letter may also state that your family has the means to cover a specified amount toward your education. This does not mean, however, that your family has funds available for this purpose. If your family needs additional money to meet its expected contribution, a student loan from a bank or other lender can help.

Private student loans

Private student loans are credit-based loans offered by banks, schools and education loan organizations. They must be certified by the school’s financial aid office and should only be used when federal loans, grants and other forms of income aren’t enough to cover the full cost of the education.


Interest rates for private student loans vary by lender. In addition, some lenders charge fees to originate and process a loan application. The fee is typically a percentage of the loan amount – 3% of $20,000, for example – and can be repaid in various ways. Be sure to ask your lender if fees apply, how much they are and what your options are for repaying them.


To determine your student’s eligibility for a private student loan, your school may require the completion of the FAFSA.

All loans must be repaid, even if you file for bankruptcy

Remember, both federal and private student loans must be repaid even if your student doesn’t finish school or isn’t happy with the education received. It’s also important to note that if you’re a co-signer on a student loan and file for bankruptcy, your responsibility for repaying the student loan will not be discharged.

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