Planning for college is exciting but understanding how to pay for it is just as important. Whether you're a student preparing for your first semester or a parent helping plan for the future, knowing how student loans work can help you make informed financial decisions with confidence.

Borrow Responsibly

Just like choosing what school you want to attend is a big deal, so is choosing the correct loan to support your college tuition and expenses. When getting a loan, there are many things to consider, both as a parent and as a student.

Think about:

• How much you want to borrow.
• What the payment will look like after graduation.
• What you want your budget to be.
• What the long-term payment plan is.

I've Got the Money, Now What?

Student loans should be used to cover your cost of attendance. That includes:

• Tuition
  • Use your loans to pay for the semester’s tuition.
• Textbooks
  • Textbooks can easily cost hundreds or even thousands each year, so it’s a good idea to use student loans to cover the costs.
• Supplies and Required Equipment
  • You can use your loan to cover the purchase of a computer or other required supplies and fees.
• Room and Board
  • Your loans can be used to pay for your dorm room, meal plan, or apartment rental.
• Transportation
  • If you’re commuting to school, you can use the loans to cover the cost of gas or a bus pass.

Those are the eligible expenses, as defined by the government in the Higher Education Act of 1965. However, how student loans actually work can mean there’s more grey areas.

Typically, when you take out a student loan, it goes directly to the school to cover set expenses like tuition, fees, and room and board. If there’s any money left over to help cover extra costs such as your living expenses and books, it’s sent to you as a check, direct deposit into your bank account, or even a credit to your student account, etc. Be sure to check with your school to understand their refund method and timing since each school can be different.

Repayment Terms

With more repayment options, the less you have to worry. Why? Because the way you repay your loan drives how much you'll save in the end.

If you start making payments sooner - or pay more each month - you can lower the cost of the loan over time. When choosing your repayment options, consider how much you feel comfortable paying each month, and how quickly you hope to have your loan entirely paid off.

Check out Student Loan Calculator | College Ave  to help you run the numbers ahead of time, so you can borrow smarter and with more confidence.

Refinancing Options

We understand that life changes after graduation. That’s why College Ave offers refinancing options.

Refinancing your existing loans can help to potentially reduce monthly payments and even overall total loan costs. When considering the option to refinance, there are a few things to be mindful of:

• Credit Strength: The better a borrower’s credit, the lower the rate they may be offered.
• Finances: Having a steady income and low income-to-debt ratio can also lead to lower rates.
• Loan Type: Refinancing is generally most often used for private loans. When federal student loans are refinanced, they become ineligible for unique benefits such as income-based repayment or public service forgiveness. Borrowers looking for help managing multiple federal student loans should consider consolidation before refinancing.

Start Planning Today

Planning for college starts with making informed financial decisions. By understanding your options and planning ahead, you can choose a student loan that supports your needs. Citizens State Bank, along with College Ave, is here to provide the personal assistance and resources you need every step of the way.

Student Loans