When you are in college it feels like you have even more expenses than you have ever had! Between tuition costs, books and dorm fees; there are still the day-to-day living expenses that students find themselves facing. Even if you have covered your tuition costs, these other expenses can cause you to feel overwhelmed in your college life. One way to help ease this burden is through a private student loan.
Understanding the Different “Costs”
There are three different types of “costs” in the world of financial aid. One type of cost you will hear is the “direct cost.” This means what the campus will directly charge you for going to school. Things like tuition, dorm fees, cafeteria plans are things that the school will send you a bill that they expect you to pay if you want to stay in school.
Another type of cost is an “indirect cost.” This means how much it will indirectly cost you to go to the school. Things like transportation, outside living expense, or personal expenses that arise with having to go to school go in this column. An example would be if you commute to school. While the campus doesn’t charge you for gas, you still have to pay for it in order to get back and forth to school.
Finally there is the Cost of Attendance. A campus takes the direct cost for students along with the average indirect cost (campus Financial Aid offices do a long complicated calculation to come up with these indirect costs which I won’t bore you with in this article) and they come up with the total Cost of Attendance or what it costs the average student to attend their school!
Why Should I Know About Cost of Attendance?
You may be thinking that you don’t need to worry about the Cost of Attendance (or COA) since all you look at is what you are being charged in tuition each semester. But knowing about the COA is important if you find that you would like to borrow some extra money. Even if you have taken care of your direct costs through grants, loans or scholarships; you still have the option to use loans to cover your indirect costs or living expenses.
The important thing to remember is that you can’t borrow past the total COA. Your Financial Aid office can tell you what your allowable limit in student loans is. The COA can change with each new school year so it’s important to check with them regularly if you plan to take out private loans for multiple years.
Where Are Your Student Loans Sent?
Finally, it’s important to remember that each private lender is different when it comes to your private student loans – whether it’s a Sallie Mae student loan or Wells Fargo loan. Some lenders might send your loan money to the school and then the school sends you a check. Others might send the money directly to you. Make sure you check with whoever you are working with so you know where your money is going!
Also, keep in mind that this isn’t like going to an ATM and getting the money. There is a process and it can take a while for the paperwork to be filed. Also, the lender and school have to work together to ensure that all the information is accurate. Give yourself plenty of time before the semester starts to get this done so the money with be there when you need it during the semester.
Budgeting before each semester is a great way to ensure that all direct and indirect costs are covered and also will help to make sure you don’t find yourself taking out more than you need in student loans. One less stress in money can help a long way to a successful college career.