Federal student loan interest rates have surged to their highest levels in over a decade, posing yet another challenge for Missouri students and families navigating paying for college.
Delays in the Federal Application for Student Aid application process are adding to the stress, leaving parents and students scrambling to find the best way to cover the rising costs of college.
Brian Walsh, head of advice and planning at the personal finance company SoFi, said it is essential for Missourians to make informed decisions about their loans and overall financial planning for higher ed.
"The most important thing is to review your financial aid package, build out a budget to figure out exactly what you're going to be spending across all different areas and know where to cut," Walsh outlined. "Really weigh all your different options before deciding schools."
One important decision is whether to take out loans in a parent's name or in the student's name with a parent co-signing. Walsh noted the choice is crucial, because it determines who is responsible for the debt. With rising interest rates, more families are carefully considering their options, as the costs and responsibilities can vary greatly.
Walsh is a big fan of work-study opportunities in financial aid packages, advising students to use them to reduce the amount they need to borrow. He also urged families to explore scholarships and other forms of financial aid to minimize reliance on loans. He added it is important to consider the net cost associated with staying in Missouri versus going out of state to school.
"If you're a Missouri resident and you go to a Missouri school, that'll end up being the lowest net-cost way to, you know, ultimately go to college," Walsh pointed out. "Followed by that would be private schools."
Finally, Walsh advised families to compare loan rates and terms. He emphasized many overlook the step despite its significant financial impact, stressing researching and comparing loan options can lead to better financial outcomes and lower student loan debt.
The Missouri Public News Service is a partner with KRCU Public Radio.
