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If you are a parent of a young adult who will soon head off to college for the first time, you have likely had an emotional and hectic year. Making a commitment to a school for your student’s education is a big step.

Congratulations on navigating a complex process and reaching one of life’s major milestones!

One of the more important communications from your student’s school, arriving soon, will be the first semester bill for tuition, and room and board. Any merit scholarships or aid awarded to your student should show as a pending credit on the bill.

Schools generally send two bills per year, and payment due dates are usually around the beginning of August for fall semester and December for spring semester.

Early summer is an appropriate time to review your college financial plan, and a good place to start is by considering all available resources, including:

  • 529 plan balances and other savings
  • Gifts from relatives
  • Private scholarships awarded to your student
  • Flexibility in your budget for making monthly cash payments
  • Loans, including Federal student loans and private loans

If loans will be part of your family’s financing picture, it’s wise to consider using the Federal Direct Stafford Loan – all students are eligible.

Loans maximums are set by the U.S. Department of Education, and they range from $5,500 for the freshman year, to $7,500 for the senior year.

The federal student loan benefits include:

  • fixed interest rate (and likely lower than a private loan)
  • no credit and no co-signer needed
  • multiple repayment and forbearance options during repayment
  • six-month grace period after graduation (or continued deferment if the student is in a qualifying, half-time graduate program)
  • Public Service Loan Forgiveness programs

Of course, it is a personal and family decision whether or not your student will borrow to help pay for college.

For access to Federal loans, you and your student must complete the Free Application for Federal Student Aid (FAFSA).

Even if you don’t want your student to have debt after graduation, Federal student loans are still worth considering, because:

  1. taking the federal loan will help your student establish a payment history and a credit score
  2. you’ll have the option to pay off the loan at graduation, or sooner
  3. if you have the need to appeal for financial aid while your student is an undergraduate (due to a job loss or other unfortunate circumstance), the college’s financial aid officers are likely to look more favorably on your situation if your student has previously accepted the ‘self-help’ loan

For more information on Federal student loans, yearly loan limits, interest and payment calculators, and Public Service Loan Forgiveness, check out: