For a comparison chart of Student Loan and Financing options click Download.
As college preparations begins, whether you are a new student or a returning student, it almost inevitably arrives. The bill. In many cases, this will have total charges listed by semester, less any financial aid, and a remaining balance owed.
Often this number can seem staggering or insurmountable and options to pay may seem difficult to decipher. However there are some great options available to you to help pay for college! This guide will help to demystify some of them.
Cash is King
The best case scenario, aside from receiving a full ride, is to pay the bill in cash or check when it is due or to used funds from a 529 plan saved for such a purpose. This will ensure you are not charged interest and the 529 funds have tax benefits associated with them.
"Total Charges-Financial Aid=$Owed"
Tip: If you are using funds from a 529, be sure to reach out to your plan administrator to coordinate timing of the payments and allow enough time for you to request a bill to be sent to the plan provider for payment.
Paying by Credit Card
Credit cards are generally a more expensive form of financing. First of all, a fee of 2.99% is charged at SJU at the time of use. Additionally it will depend on how long you intend to carry this balance and at what interest rate you have on the credit card. For example, if you have a 0% introductory interest rate on the card and plan to pay it off before this expires, that credit has only cost you 3% which might be a good option and is lower than most loans. In additional, some individuals have rewards cards, which provide incentives for using cards. Again this should always be balanced against fees and interest rate.
These can be an excellent financing option! At SJU we offer payment plans for just $35/semester. This allows a student or family to pay the remaining amount owed over 3, 4, or 5 months.
Tip: Set these up early! The 5 month plans often begins 1-2 months before the semester begins, so if you want to spread it out farther start early. Beginning a payment plan later may limit your options to a 3 month plan.
All Loans are not created equal
Any time you are borrowing a loan, be sure to compare these three items
1) Loan fees 2) Interest Rate 3) Repayment Options
Perkins Loan-If you are offered this loan take it! It is very low interest at 5%, no fees, and very generous repayment terms and loan cancellation options. Schools have limited access to these funds so only students with the highest costs and financial need will be offered this loan.
Direct Subsidized Loan– As of July 1,2015 the interest on this loan is now 4.29% which is higher than in previous years, however this is still a pretty good loan option with good options for repayment. The government subsidizes the interest while you are in school, so it is interest free money for your time in college, you must have financial need on the FAFSA to qualify.
"Cost of Attendance-Expected Family Contribution=Financial Need"
Direct Unsubsidized Loan-This loan is still at 4.29%(2015/16) for Undergraduate students and 5.84% (2015/16)for graduate students. Any student can qualify for this loan and it is readily available through the FAFSA process. A student can qualify for additional funds if a parent is denied for a plus loan. It also has low fees and some good repayment options.
Direct PLUS loan—This is a loan for parents to take on behalf of students and they must pass a credit check to qualify. It is also a loan available to graduate students with costs higher than their eligibility for Unsubsidized loans. These loans are higher interest rate at 6.84%(2015/16) and will charge a 4% fee. Re-payment options for student plus loans are more generous than parents.
These are the most variable of any of the financing options. These are loans in the students name typically with a parent co-singer. SJU does not have a preferred lender policy and cannot make specific recommendations.
Tip: Start early as these can take more time and compares rates, repayment terms and interest carefully.