Would you order a three-course meal at a restaurant if you only knew the cost of the first course? Would you buy a car if you only knew what your loan payments would be for the first year of a five-year loan?
You probably would not agree to do either of these things. So why plan to go to college for four years only knowing the cost of the first year? That is basically what you are doing when you select a college to attend based on the award packet you receive in February or March of the year before you or your child starts college.
The College Funding Forecaster is a free, online tool designed to help borrowers make good decisions about borrowing student loans. After you enter information from your award packet you receive from a college, this tool will show you a projection of your college costs for four years as well as two important dollar amounts: your potential college funding gap and your potential student loan debt. The total and annual amounts are displayed for each item.
The college funding gap is the amount of money that you will need to come up with to pay your university bill after you have exhausted all aid, contributions from income and savings accounts, and federal student loans. Where will you get that extra money if you or your family can't come up with it? Three options are typically available:
- Work more hours while in school and use your additional earnings.
- Parents of dependent students can take out a Federal Direct PLUS loan.
- Take out a private student loan, like the Partnership Advance Education Loan available from Iowa Student Loan.
When all is said and done, you will most likely have student loan debt when you graduate. If you take out a private student loan and have also accepted the federal student loans offered in your award packet (you should always exhaust all of your federal student loan eligibility before considering the use of other loans), that can add up to a lot of debt.
The College Funding Forecaster calculates your potential college funding gap and potential student loan debt so you can start planning now. If you need additional money beyond the aid and federal loans offered, you can work more hours over the summer to earn more money, take an extra class each semester to graduate on time and reduce your need to borrow, or reduce some of the costs you borrow (do you really need to borrow, and pay interest on, transportation costs to and from school?). The College Funding Forecaster tool allows you to experiment with different scenarios to find ways to close your funding gap and borrow only the amount you need.