Students, parents rush to find loans
Many parents put off student loan decisions until the last minute.
BOSTON -- Tuition costs are skyrocketing, interest rates are rising and, at some colleges, the new academic year already has begun.
College students and parents are scrambling to find loans that best fill the "gap" -- the amount of money needed for college costs not covered through financial aid and personal savings.
Nationally, the size of the gap is projected to reach $35.7 billion this year.
"'Back to School' means more than dorm furniture and supplies -- it includes determining the best way to pay for college, " said Kevin Walker, co-founder and CEO of SimpleTuition, Inc., a company helping parents and students compare education financing choices.
"As students and parents determine how to best finance remaining costs, many do so with little time or knowledge on how to find and compare the loans to best fit their needs," Walker said.
Parents often report feeling overwhelmed with the amount of information on financing options.
Loans come with different terms and benefits, and borrowers find it difficult to compare on an 'apples-to-apples' basis. With the clock ticking, students and parents can rush into loan decisions which leads to mistakes and 'buyer's remorse,'" he added.
With the average undergraduate student loan debt approaching $19,000, most families can no longer cover their costs with just one loan (like mortgages or car loans) and, thanks to limits on federal loans, often end up with three to four loans each year. By graduation, students have upward of 10 loans.
What to remember
SimpleTuition Inc. offers a few things to remember when reviewing college loan options:
Get Creative About Sources for Direct Payment: You may be surprised to find additional resources. Think about the savings by having a child away from home and revisit assumptions about college-related expenses such as used books and off-campus living.
Remember: All Loans Are Not Presented Equally: Each loan comes with different options including fees, repayment lengths and consolidation options. Be sure to review all the terms and benefits to ensure you're choosing the best loan for the long haul.
Avoid Buyer's Remorse, Start Early: Many parents put off decisions until the last minute. Then, in a panic, they rush and pick the lender that their friend used, go with a big brand or local bank, charge their credit cards, dip into their 401(k) and even take out home equity loans. Start early and be diligent in researching loans from multiple sources.