Financing your student's education

So your child is ready to go off to college and you are perplexed over how you will pay for their education? If you are like most parents, you have heard of scholarships and loans but when it comes to the details, here is where you get hung up. If this is the case, here is a short synopsis of how to interpret college finance terminology.

Scholarships: There are two types of scholarships, undergraduate and graduate fellowships. A scholarship is a gift in that it does not have to be repaid like a student loan. Schools, individuals and various sponsors help fund such scholarships so that students who qualify can be rewarded or students who can’t afford to pay for school out of their pocket can attend college. Because the money is a gift, the funds are generally reserved for students with specific qualifications such as academic, athletic and so on. Some scholarships are set up for students who are interested in a particular field of study or are just plain need of financial assistance.

Student Loans: Student loans are like any type of loan in that it must be paid back. Education loans are broke down into three categories – Student Loans (Stafford and Perkins Loans), Parent Loans and Private Student Loans. Federal laws set the maximum interest rates and fees that can be charged. Many student loans offer flexible repayment terms. In some cases there are loan forgiveness programs in which a student pays off the loan in exchange for volunteer work or military service. Private student loans can help you fill the gap between federal, state or school assistance loans or scholarships. Private loans are often called alternative student loans and are based on your credit. These loans must be used for specific educational expenses. Many websites offer financial calculators so that you can estimate your monthly payments and what your debt will be.

Military Student Aid: For students who are interested in pursuing careers in the military, there is military student aid. Aid such as the Montgomery GI Bill covers about three-fifths of your college education and is good for up to ten years from the date of your last discharge or release from active duty or training. The Montgomery GI Bill is for those who are enrolled in the Select Reserve of the Army, Navy, Air Force, Marine Corps, Coast Guard and the Army and Air National Guard. If you are in active duty, you accept a pay reduction of $100 per month for twelve months; when you use your benefits you can receive $1,101 monthly for a maximum of 36 months of educational benefits. This benefit may be used for degree and certificate programs, flight training, apprenticeship/on-the-job-training and correspondence courses – if the veteran is enrolled full-time. Part-time students receive less but can stretch out their funds longer. Reserve veterans have their own unique benefits.

Kara Lilly, a Librarian for over 15 years in College Park, creates the Eduology for schoolwork.org, a leading provider of homework help, college directories with satellite maps and a comprehensive breakdown of student loans. For more information, please visit www.schoolwork.org.