The Most Common Student Loan Questions — Answered
January 30, 2018 |
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Saving and paying for college can be one of the most daunting tasks for students and parents alike. With ever-climbing tuition prices, the cost of living, as well as textbooks and transportation prices, it may seem completely out of reach. It isn’t. There are great ways to effectively save for college and manage a student loan. The key is not to get in over your head, and at Dime, we’re here to help you manage exactly that.
How can I save for either my — or my child’s — college finances?
The best way to save for your college fund, or even your child’s college tuition, is to first make a conscious effort to do so. Maybe create a plan of how much you need to save to make it feasible to start school for yourself or your child, and then open up a Statement Savings account with us. If you are planning to save for a child, you can also start a DimeDirect Money Market account with as little as $1,000 dollars to start. Continue the trend by putting a little away each month and enjoy the 1.35% APY. We even offer a Student Savings account so when your child gets a little older they can start planning for their college finances as well.
Are different savings options, like Dime’s Money Market Account, a good idea?
Using our Money Market Account is a great idea for some people. Depending on your timeline for schooling, a DimeDirect Money Market account pays 1.35% back in interest every year, so if you’re getting an early start, this can help you create a solid savings foundation. For others that want to use funds in the nearer term, a Statement Savings may be preferable. A good rule of thumb is simply having someplace you can make a conscious effort to put funds every month with a goal.
What kind of interest rates can I expect on student loans?
There are two main types of student loans.
- Subsidized loans are loans that do not accrue interest for the time the student is still attending college, and they are covered by the federal government. The average interest rate after graduation for these loans currently is 4.45%
- The second type of loans is Unsubsidized loans. In this type of loan, the interest rate is the same as the subsidized one, usually 4.45%. However, instead of the interest being covered by the government while the student is still in classes, interest starts to accrue as soon as the loan is taken out.
Should I get federal or private loans?
The answer to this will likely depend entirely on your situation, though most people will opt for a federal loan. A federal loan comes from the government, and generally, they tend to have lower interest rates and more options when it comes time to repay it. There is also the matter of having a fixed interest rate, meaning you pay the same percentage of interest from the day you sign to the day you finish the payments. With a private loan, there is a possibility that the interest rate can change. It also doesn’t offer the same sorts of options when it comes to paying down the bill.
Access more from our money management tools, or give us a call at 1-800-321-DIME (3463) today to learn more about how we can help prepare you, or the student in your household, for a brighter financial future.