All over the internet, it is not uncommon to see banners and link ads telling you that you might qualify for financial aid. At first glance, these ads can make it sound like the government or colleges will cover all your college expenses and basically give you a college education for free. But, when it comes to paying for college, prospective college students need to understand one thing: paying for your education is your responsibility. How you decide to pay for it will affect your life for years. So you need to make sure you plan out how you will pay for college carefully.

Think about paying for your education as if you were buying a new car. If you were looking at a new car, you would have a few options on how you decided to pay for it. If you could, you’d want to purchase that car with cash so you don’t have to pay extra in interest. Your second choice would be to borrow money from a friend or relative who would charge you little or no interest. The loan is the worst option because of the interest that builds up over time until you pay it off.

As you can probably tell, the best way to finance your purchase is with no interest; the worst is to pay high amounts of interest.

So how does this idea transfer over to paying for college? The following list are your own financing options for your college education in order from best to worst:

1. Grants and scholarships – If you qualify for these, they cost you nothing and, as long as you finish the semester for which they were awarded, you don’t usually have to pay them back. No interest and they don’t come out of your pocket. Keep in mind, however, that you might not qualify for these forms of financing. For info on grants visit this site.

2. Cash from your own pocket – While you have to pay for it yourself, you at least save yourself the burden of interest. Many students work or save up money beforehand to cover their college costs. They may be putting in a lot of hours between school and work, but at least they don’t have to worry about paying interest fees later.

3. Gift from a parent – Getting money from your parents is great because it’s also usually interest-free and you might not have to pay them back.

4. Borrowing from a parent – Some parents, on the other hand, will ask that you pay them back. They may or may not ask you to pay them interest. If they do ask you to pay interest, it will likely not be as high as what you would pay on student loans or credit cards.

5. Borrowing from a relative or friend – Like parents, friends and relatives may or may not ask you to pay interest. The interest they do require will likely be lower than other forms of debt, making them a good fifth option.

6. Government loans – These student loans are available through a college’s financial aid department and any student can qualify for them if needed. But that doesn’t mean students should take them, if they can help it. These loans have modest interest rates, but it’s still extra money you have to pay.

7. Private loans and credit cards – Students often get offers in the mail from banks like Chase or Mastercard offering loans. These loans and credit cards are the worst way to pay for college. Their interest rates will be triple or even five times that of government loans. With interest rates like that, you might never pay them off.

Going to college is a great decision. But making the right decision on how you’ll pay for it is even more important. So do everything you can to minimize the interest you will pay and you will be happy later.

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