Starting college is an exciting milestone, and certainly a costly one, too! From tuition to books, room and board, and more, figuring out how to pay for it all can feel overwhelming. Even with the help of financial aid, students are still left with expenses to cover. In fact, the Education Data Initiative showed that in 2024, college students and their families covered 48% of college expenses out-of-pocket, averaging $13,760 per student.

We know the pressure that comes with planning for college expenses, but rest assured, we’re here to help! Whether you’re a student or a parent of a student, our goal is to provide expert advice and practical resources to ease the process.

In this article, we’ll answer families’ top college financing questions and share insights to prepare both students and parents for success.

“How much does college cost, and how can we pay for it?”

While the cost of college varies depending on the school and location, there are several funding options available to help meet your needs:

• Grants and scholarships – Free money that you don’t have to pay back 
• Federal and private loans – Borrowed funds that you repay over time with interest 
• Work-study jobs – Part-time employment that helps cover tuition costs 
• College savings accounts – Such as 529 College Savings plans or High-Yield Savings

The best way to determine what financial aid you or your student qualifies for is by completing the FAFSA (Free Application for Federal Student Aid). This application awards students with federal grants, student loans, work-study jobs, and more. Be sure to check your state and school deadlines so you don’t miss your chance to apply!

“How are Private Student Loans Different from Federal Student Loans?”

Loans are a popular borrowing option for families planning for college. Here’s how federal loans and private student loans differ:

• Federal student loans are issued by the U.S. Department of Education and offer flexible repayment options. There are different types of loans you or your student can qualify for based on needs, talents, and/or academic abilities.
• Private student loans are issued through a financial institution and require a credit check during the application process. Traditional private student loans are lump-sum loans, but there are also private “lines of credit” that you can use, repay, and repeat to cover expenses like books, room and board, and other related costs. Although repayment options for private student loans are also flexible, they tend to offer fewer options than federal loans.

“What Should You Look for in a Private Loan?”

If you’re curious about borrowing from a private loan lender, it’s important to compare lenders and choose the one that best suits you. Here are a few things to pay attention to as you’re exploring options:

•  Interest rates: Private student loans can have fixed or variable rates. Fixed rates stay the same throughout the life of the loan, while variable rates change over time.
• Repayment options: Find out what your repayment process will look like. Is it immediate, interest-only, deferred, or hybrid? This will help you plan and budget accordingly.
• Fees: Be aware of any prepayment or origination fees when securing the loan. Some lenders offer zero origination, which waives the upfront fees for opening a loan.

Don’t overlook credit unions! Elements Financial offers a private education line of credit that fills the gap between the cost of college and your financial aid package. Learn more.

“Who Should Borrow – the Student or the Parent?”

When applying for a federal student loan through FAFSA, most direct loans are borrowed by the student. However, a Federal Parent PLUS loan is available to parents of undergraduate students to help cover education expenses.

For private student loans, a parent can co-sign on their student’s loan application. Because private loans often have credit checks, having a reliable co-applicant can increase a student’s chances of getting approved with a lower interest rate.

If a parent or guardian is co-signing a loan, it’s important to have open conversations, so everyone is on the same page about repayment.

“When should you consider a Traditional Private Loan or private Line of Credit?”

We’ve discussed the differences between federal student loans and private student loans, but choosing a private loan or line of credit depends on what best suits your needs.

Sometimes, even after completing the FAFSA, receiving scholarships, and accepting federal student loans, families are still left with uncovered expenses. If you’re a student or the parent of a student who has exhausted all other sources of financial aid, you might consider a private student loan to cover extra costs.

Traditional private loans award the full loan amount upfront, and recipients must apply for funding for each academic year. With a private student line of credit, you can secure funding for the whole undergraduate career in one simple application. If you’re looking to continue your education, you can request more funds from your line of credit (also known as a “draw) for the amount you need! Learn more.

As a local, not-for-profit credit union, we’ve got your best interests in mind! Have questions or need trusted advice? Contact Elements Financial for support in all aspects of your financial life.