"Many college students are gearing up for a new school year starting in the coming weeks — or even this week for some students. But for most, covering the cost of a college education isn't financially feasible without assistance. According to the Department of Education, nearly 88% of students at four-year colleges rely on at least some form of financial aid," CBS reports.

"One of the primary reasons to prioritize federal student loans is because they tend to have lower interest rates. Right now, the average student loan rates range from 6.53% to 9.08% for federal loans, while their private counterparts range from 3.74% to 17.99%.

'For many students, the protections of federal student loans outweigh the advantages of private lending,' says Dana Kelly, vice president of professional development & institutional compliance for the National Association of Student Financial Aid Administrators (NASFAA). 

Kelly lists flexible repayment plans, forgiveness programs, deferments and forbearance as benefits that provide a level of security for federal student borrowers, but loan amounts could present a problem. 

'The downside of a federal loan is the limits imposed on the borrower,' notes Kelly.

Federal student loans are limited to $5,500 to $23,000 in subsidized funding, depending on your status as an undergraduate or graduate student, your academic year and whether you're a dependent or independent student. Given the rising costs of tuition, fees and other school-related needs, you may need more than that to cover your expenses.

'Private loans can cover up to the full cost of education," adds Kelly. "Federal loans are limited by grade level and may only cover a portion of a student's cost to attend.'"

NASFAA's "Notable Headlines" section highlights media coverage of financial aid to help members stay up to date with the latest news. Articles included under the notable headlines section are not written by NASFAA, but rather by external sources. Inclusion in Today's News does not imply endorsement of the material or guarantee the accuracy of information presented.

Publication Date: 8/14/2024