COLUMBUS, Ohio (WCMH) — Student loan companies targeting college-bound kids can send tempting offers through the mail.
But the best loan is no loan, grants, scholarships, and then — if the student absolutely must — a federal loan before privately-offered borrowing, says Andrew Pentis, senior writer at Student Loan Hero by Lending Tree and a certified student loan counsellor.
In Franklin County, the average student debt is $37,201, with a monthly re-payment of $295 per student, according to statistics gathered by Student Loan Hero, which makes its money through the companies featured on its website.
“The best advice is to exhaust every other option you possibly can before resorting to that loan,” Pentis said. “That’s applying for scholarships and grants, tapping your savings, doing anything you can before borrowing. But absolutely, if borrowing becomes a must, generally speaking, federal loans are going to be your best route.
“And that’s because not only are interest rates fairly low, both currently and in recent years, but the protections on those loans are far greater than with what you would see with private student loan companies.”
If you struggle to repay a federal loan, there’s flexibility. You can change your payment plan for free and at a moment’s notice, Pentis said. “With private student loans, most of those options are not available,” he said. “So even if you’re tempted by a lower interest rate on a private loan, it does behoove families to consider federal loans first.”
Federal loans also carry the advantage of programs like the student loan moratorium, now enacted through the end of the year. And if the government decides to forgive debt, it will be for these types of loans.
Sallie Mae, which used to service federal loans, now exclusively serves private student loans — worth noting for parents who had federal loans through Sallie Mae back in the day. Pentis said a private loan “…may help you bridge any remaining gap in the cost of attendance after you’ve borrowed federal student loans, but you want to prioritize federal loans over private loans in most cases.”
AP classes and dual enrollment programs are smart choices for students because they shorten the amount of time in college, says Pentis. A part-time job to bank money before college is another wise choice.
Students can also go to community colleges, such as Columbus State, where English, math, and science classes cost a fraction of the price of four-year colleges and universities. Sending a student to community college for two years to fill general education requirements saves many thousands of dollars each semester.
“Dedicating your time to applying to state grants and scholarships, which might sound like an onerous task, is hugely important,” Pentis said. “Because you can significantly decrease the amount of debt you’ll have to take on for college.”
If a student spends an hour writing an essay and wins a $1000 scholarship, it may be the only time in their lives that they earn $1,000 an hour discussing themselves.