Jul 1, 2011

Get FastWeb’s FREE ‘Reference Guide’ on Choosing College Loans

The numbers are breathtaking. Freshmen at George Washington University will be asked to pay $44,103 this fall for tuition alone. And at Georgetown, undergrads will be looking at tuition amounting to just under $41,000. Add fees, room and board, and other miscellaneous expenses and you’re looking at a total cost of well over $200,000 for four years of postsecondary education at either of these schools.

Even with generous financial aid packages, most families are hard pressed to come up with that kind of money without considering the possibility of an educational loan. And borrowing can be a complicated process requiring research as well as an understanding of what loans actually cost.

For example, can you quickly compute the total amount paid back (including principal and interest) for a $10,000 loan with a 10-year term at 10% interest? Choose one of the following:

A. $11,000
B. $15,858
C. $18,100
D. $20,000
E. $32,479
F. None of the Above

If you and your calculator are having a hard time coming up with an answer, you’re not alone. That’s why the financial aid gurus at FastWeb and FinAid collaborated on the Quick Reference Guide on Choosing a Student or Parent Loan, which provides every detail related to borrowing for college including the sad truth of how debt accumulates over time.

Written with the understanding that smarter borrowing can help reduce debt burden, the Guide outlines ten practical student loan tips covering everything from FAFSA completion to income tax deductions. A glossary of frequently-used terms along with a list of student loan resources bring first-time borrowers up to speed on what they need to know to make educated decisions about college loans.

In addition, the Guide offers basic information and advice on interest capitalization, loan amortization, variable interest rates, the impact of increases in interest rates on monthly loan payments, and a discussion on the risks associated with borrowing too much money. Descriptions are provided for every kind of parent and/or student loan imaginable including federal Perkins Loans, federal Stafford Loans, federal PLUS Loans, private student loans, home equity loans and lines of credit, credit card debt, and borrowing from retirement plans.

Parents or anyone interested in issues related to borrowing for college are welcome to print copies of the Guide or use it as an online reference. And if you’re the parent of a college-bound high school student it’s never too early to start researching how you’re going to finance those bills.

By the way, the correct answer is B. $15,858, or more than half again what was borrowed. Sobering.

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