Federal loans offer students more options

If there’s one big mistake Zhanna Goltser sees students make when picking college loans, it’s turning to private lenders over the federal government.

“Students commonly go to the Internet and look for banks on the Web or they pay attention to a lot advertisements on TV instead of looking at the federal loan information in the financial aid office,” said Ms. Goltser, director of financial aid for the College of Notre Dame of Maryland.

Private loans usually cost more in interest than federal loans and they don’t offer as much repayment flexibility, she said. Federal loans can be a better fit, she added, because students don’t have to pay them back while they’re in school.

“The interest rates are fixed and some of the loans are not based on credit history,” said Ms. Goltser, noting that a subsidized Stafford loan has a 6.8 percent interest rate.

The amount available in federal loans depends on a student’s grade level. Ms. Goltser strongly advised families to look into federal loans early and fill out the necessary federal applications for financial aid.

“Some funding is limited and when you apply late, not all the money is available,” she said.

Although some students believe they can save money by delaying college while they work, Ms. Goltser advised against that approach. Tuition is always rising, she said, and it can be difficult to keep up.

“They should not delay because of financial concerns,” she said.

Ms. Goltser noted that families can also take out federal PLUS loans (Parent Loan for Undergraduate Students) to help pay for tuition and other school-related and living expenses.

“If students have a (PLUS) loan, they need to know how to budget money and make sure they don’t have expenses now that they can’t pay for,” she said. “They need to know not only what’s available, but how to use it wisely.”

Scholarships, grants and work study are other ways to help pay for college, according to Ms. Goltser. Notre Dame maintains an online database of external scholarships for prospective students and a database for current students. The college Web site also features a loan calculator so students can understand what their payments will be after graduation.

Catholic Review

Catholic Review

The Catholic Review is the official publication of the Archdiocese of Baltimore.