Graduating from a college or university doubles your lifetime income, even under conservative estimates. A degree also presents greater opportunities for advancement, and offers a broader range of job positions. Financing an education is a major undertaking, but with planning it can be done.

Rule#1- Be wary of scam artists who provide services for pay. The services they provide are often available for free. If the offer they advertise seems too good to be true, the offer is probably a con.

One of the most popular loans is available through the Sallie Mae organization. Other ways of financing a college education are available, and they will be discussed in another article. This article will focus on government loans through Sallie Mae.

The Sallie Mae organization is a private company that is charged with administering loan programs that are guaranteed by the Federal government. Their web site http://www.salliemae.com/ provides a detailed discussion of several alternatives for financing, including Federally backed student loans, loans to parents of students and private lender programs. Most Sallie Mae loans are made under the Federal Family Education Loan Program (FFELP).

The first step in financing a college education is to complete a Free Application for Federal Student Aid. This application is called a FAFSA and should be completed by any student thinking about attending college.

The time to complete and submit the FAFSA form is between January 1st and July 2nd of the year you are entering college. An early completion of the process may increase your choices among the available programs for grants and loans. The application should be completed before April 1st if the situation involves severe financial hardship that would point directly at need for the student to seek a grant.

The form contains approximately 100 questions about family income, assets, and family size. From this information, a determination is made regarding the types of loans available and the amount of money available.

The FAFSA form is available at high school guidance offices, college financial aid offices, the department of education, and online at http://www.salliemae.com/. After this information is completed once, the information is kept on file and changes will have to be made the following year (rather than a completely new application).

Information regarding the type of loans and the amount of money available to an applicant is included in a report called a Student Aid Report (SAR). The Student Aid Report is mailed to the student and to the colleges requested by the student. Once a college Financial Aid Office receives this information, they will contact the student. Most Financial Aid Offices work with a family to encourage the enrollment of the student. The Financial Aid Office will also inform you of any scholarships, work-study plans, and grants which they offer. Go to the college website to investigate for yourself.

Typically, the Federal education loans are made through major banks. The Student Aid Report lists the banks. The choice of banks is up to you. Confirm your understanding of the rates and terms and check to be sure you're getting the best deal - especially important for private loans that supplement the Federal funds. The interest rates are a percentage over the prime rate. An origination fee is also charged.

Repayment:

The repayment of Federally backed student loans is spread over a ten-year period. The loans may be paid off early. Electronic payment is available.

For a parent loan, the repayment begins immediately.

For a subsidized student loan, the first loan payment is not due until after the student is no longer actively pursuing a degree. The student has 6 months after becoming an inactive student before the first loan payment is due. A nice feature of some loans (for example, Stafford loans) is interest does not begin to accrue until the time for the loan to be repaid.

A typical example of a parent loan: If $38,000 is borrowed over a four year period, the payment per month when all four loans are being repaid would be approximately $360 a month. Once a portion of the loan is paid off (typically ten years), the amount of the payment would decrease accordingly until the rest of the loan is paid off.

The types of loans and grants available through this process include Undergraduate, Parent (Plus), Home Equity Line of Credit, Graduate Business, Law, Medical, Graduate, Career Training, and Trade or Technical School.

The Loan Names in this plan are Stafford, Plus, Home Equity, MBA Loans, Bar Study, Med Loans, MEDEA, and Career Training.

Sallie Mae is a must visit website for parent and students nearing college age.

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