The FAFSA, based upon my 12 years of experience in working with college-bound high school students and their families, is a document that elicits terror and confusion. However, it really doesn’t have to be this way. I tell parents that the FAFSA really is simply an admission ticket to be considered for a wide range of college, state, and federal financial aid. In fact, parents can’t even qualify for any federal loans unless they fill out the FAFSA. If you don’t fill out the FAFSA, from a purely federal loan perspective, you don’t exist as a financial aid applicant to the federal government or the colleges.

The FAFSA website, surprisingly, is an excellent resource for most commonly-asked questions about how to complete the form. The form itself is remarkably user-friendly; if you fill it out electronically, which is how most families do it nowadays, the system will actually alert you to any potential errors when you’re entering information.

Rather than focus upon the mechanical aspects about the FAFSA, let me highlight two key general tips on the twin 500-pound gorillas of the federal loan world: subsidized and unsubsidized loans. These are the federal student loans that are frequently obtained via the FAFSA.

Subsidized student loans

Obviously a student would prefer a scholarship as opposed to a loan, but if you’re going to need a loan – and chances are you’re almost certainly going to have to borrow some money – then subsidized federal loans are the way to go. Interest rates are currently 3.86%, and the best part about these loans is that you don’t know owe any money or any interest until six months after you graduate (or fall below half-time status). And when I say graduate, I mean from your final degree program. Let’s say, for example, that you pursue a bachelors, Masters, and law degree without any breaks. You would only be responsible to repay the subsidized student loan six months after graduation from law school – even if you got your only subsidized student loan as a freshman in college. Even if you are able to fully pay for your college education, if you are offered a subsidized student loan why in the world would you not take it? It’s interest-free until your six-month grace period after graduation is over, in which case you can simply repay the loan in full, without penalty. In the meantime, your family would be able to invest that money in ways that (hopefully) generate income while the student is in college. If you truly do need the money, it’s nice to know that no interest is accumulating in the background while you are pursuing your studies.

In short, I can honestly think of no logical reason why a student wouldn’t accept the maximum in subsidized student loan funding for a given academic year.

Unsubsidized student loan

As the name implies, there are no taxpayer dollars going to pay off the interest while the student is in school. However, the student will not be expected to pay interest on the loan during his or her college, graduate, or professional education. Nonetheless, lurking in the background is the fact that unsubsidized loans are generating interest, and that they will have to be repaid six months after the student graduates (or falls below half-time status).

Why would someone take out these loans you might ask?

Well, unsubsidized student loans are still generally a better product than private sector loans. The interest rates are, like the subsidized student loans at the time of this writing, at 3.86% — clearly a better interest rate than what most private banks offer.

There’s another reason why I’m a fan of both the unsubsidized and subsidized loans from Uncle Sam. Let’s say a student gets into trouble and has a hard time repaying the lender. Although the federal government will expect full repayment – and forget about declaring bankruptcy to extinguish federal, state or private student loans because it’s virtually impossible to do so – in my experience the federal government will work more closely and more fairly with a delinquent applicant than will a private bank.

So when in doubt, take the federal loans as opposed to a private loan. They are both great loan programs and are the two loans most undergraduates will be offered if they and their parents complete the FAFSA.

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About the Author

Today’s guest post is  from Jason Lum, the founder of ScholarEdge College Consulting.  Jason has won over $250,000 scholarships and graduated debt free.  Jason has helped students gain admission to some of the top universities in the country including Harvard, Yale and Stanford.  Follow him on Twitter and Facebook.

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Most parents would prefer that students enter college on a full scholarship. The harsh reality is that few students do. How do you make up the difference? Students and parents take out loans. Student loans are usually a part of most financial aid packages. Ideally, you should try and graduate with minimal debt. But sometimes loans can supplement scholarships, work study and merit aid.

Here’s the problem, however. When you start sifting through all the words and the small print, it can be a bit overwhelming. You should never borrow any college money without reading the fine print. Parents and students need to understand what they are signing and how the amount will have to be repaid. You can’t just look at the current situation when deciding. You have to look at the future and how that debt will affect the student.

Don’t sign on the dotted line before checking out Zinch’s high school blog on how to sift through the student loan terminology.

When considering different ways to fund college expenses, some students and parents focus on federal loans, scholarships and grants. While these types of aid can provide the necessary funds to complete a four-year or graduate program, they are not the only options available.

Several banks and private lenders offer private loans for college, which are essentially personal loans that can be used for tuition and other college related expenses.  Even if a student applies for federal aid, a private loan can pay for expenses not covered by their government loan.

If you or your child has never considered private student loans, here are four reasons to look into this option.

Flexible repayment plans

If a parent applies for a private student loan to pay his child’s tuition, repayment begins as soon as funds are disbursed. Fortunately, this is not the case for students who apply for their own private loan.

For student who apply, repayment does not begin until six months after graduation from school. This is a plus, as many students need time to find employment and adjust to their new expenses. Of course, students do not have to wait until graduation. There is also the option of making in-school payments. In-school payments can reduces how much a student pays in interest and lowers his overall balance.

Fixed and variable interest rates

Some college students shy away from private lenders because many private loans feature a variable rate. However, fixed rate private student loans do exist. To find these loans, students have to shop around and compare rates with different banks. Fixed rate student loans are desirable because the rate remains the same for the duration of the loan, thus eliminating payment increase and decreases.

Option to add a cosigner

Because private funding is a type of personal loan, banks do require a credit check. Good credit is a criteria for private funding. This can be problematic for college students who do not have a credit history, or those with a limited credit history. But there are ways around this hurdle. Students who need additional funding can add a cosigner – such as a parent – to their loan. This increases the odds of approval, however, the cosigner must have good credit.

Use funds for anything

If applying for a private student loan, funds can be used for more than tuition. This type of personal loan is helpful for covering all college-related expenses, such as books, supplies, a computer, rooming and board, and transportation.

College is expensive, and unfortunately, some people put off their dream of acquiring a higher education because they don’t have enough in savings. But with the help of private student loans, college can be a reality.

A word of advice: Be careful about how much you borrow and gage wisely your ability to repay after graduation. With student debt rising to record levels, smart borrowing should ALWAYS be a priority.

The day a son or daughter receives his/her college acceptance letter is one filled with joy and celebration.  The day that parents have to sit down with their children to choose student loans is not.  Selecting a student loan is often an intimidating process: not only are there so many options out there, but it is scary to think that a wrong decision could cost tens of thousands of dollars.   But before you pull out all of your hair just thinking about it, know two things.  One, Almost 60% of college students have to borrow money each year to assist in  tuition.  And two, there is a resource out there that helps parents and their kids find, using objective data, the student loan that best fits their needs and preferences.

FindTheBest just launched the best student loans comparison that lets students and their parents sort through 69 different loans by average fixed and variable interest rates and lifetime limit.  One can also filter down this list by loan type, loan coverage, eligible borrowers, cosigner requirements, and more.  For example, if you are an undergraduate that wants to get a loan from a private bank, you have a list of 7 loans to compare.  From here, you can pick the three or four loans that you like the most, and then compare side-by-side all of their application requirements, coverage, interest rates, repayment options, and more.

To summarize, FindTheBest breaks down the data, makes it easy to view, gives it to students and parents for free, so that scams and hidden fees are no longer a threat.  With this resource, students can make the most informed decision based on the factors that are important to them.  And if you have, no idea where to even start with student loans, check out the “Choosing A Student Loan” tab that guides you through the loan process and how this comparison tool works.  Try out the resource now below:

Here’s a current comprehensive list of my picks for college info websites. Do you have any additional suggestions?

COLLEGE BLOGS

1. ParentsCountdowntoCollegeCoach.com–You will find the MOST information here on our blog: college guidance, college planning, college coaching, and college news. Come here first to find the latest and best tools to help you navigate the college maze.

2. TheCollegeSolutionBlog.com–An excellent resource for college-bound teens and their parents: admissions, testing, and financial aid.

3. UniversityLanguage.com/blog–Great blog articles about everything related to college admissions geared toward students.

4. NYTimes-TheChoiceBlog–Demystifying college admissions and financial aid by providing articles and Q&A by experts in the field.

5. GreatCollegeAdvice.com/blog–An excellent resource about the college admissions process providing expert advice helping students map their college journey.

6. USNews.com/Education–The education channel of U.S. News and World Reports providing the latest news and information related to college.

7. CollegeBasics.com–An excellent resource for information about college essays, college applications and high school resumes.

8. InsideHigherEd.com/blogs–Several different blogs related to higher education.

9. TheRealCollegeGuide.com–Four blogs about college life: the dorm, lifestyle, academics and heath and fitness.

13. UniversityParent.com–A site where parents can ask questions, gather information, and download and view college guides and campus newsletters.

14. CollegeParentCentral.com–A blog created to give parents useful information about college and the college admissions process.

15. YourCollegeKid.com–A site with parent forums and other college prep tools.

FINANCIAL AID

16. FindTuition.com–Help finding money to pay for college, along with articles related to college financing.

24. Zinch.com–A free service for students and parents where students can showcase themselves, connect with colleges, and search for scholarships.

25. MeritAid.com–The place to go to find merit scholarships and academic scholarships from colleges across the country.

26. Scholarships.com–An extensive scholarship search engine that helps you search and schedule alerts for deadlines.

27. How2winscholarships.com–A guide for parents and students on how to effectively apply to and win scholarships.

COLLEGE VISITS

28. SmartCollegeVisit.com–Created to provide information about college visits, help parents and students plan, and view personal accounts from both parents and students.

29. CollegeWeekLive.com–A virtual college fair that sponsors free LIVE events with archived presentations, student chats, and college booths.

COLLEGE PLANNING

32. EntrepreneurEdu.org–This is an excellent resource for students who are interested in colleges who offer entrepreneurial programs.

33. BetterGrads.org–A network of college student peer advisers and a resource filled website presenting honest accounts of the college experience geared toward high school students.

34. MyCollegeCalendar.org–Interactive college admissions counseling program designed for both high school students and their parents.

43 BigFuture.collegeboard.org–A planning tool to help parents and students get ready for college.

TEST PREP / TUTORING

44. TutorsForTestPrep.com–An SAT expert and coach offering tips to help your college-bound teen improve their SAT/ACT scores.

45. FairTest.org–The site for the National Center for fair and open testing providing information about colleges who do not use the SAT/ACT for admissions decisions.

46. Number2.com–Free online test prep (SAT/ACT) with vocabulary exercises and help.

47. Word-nerd.com–An PSAT/SAT vocabulary prep tool.

48. QuincyTutoring.com–A resource to find a tutor and schedule a tutoring session.

49. SATprepforADHD.com–Tutoring to help students with learning disabilities and ADHD.

Update: I was just reminded of this GREAT additional SAT resource:

DirectHitsPublishing.com–Books to help you study KEY vocabulary words for standardized tests.

TEXTBOOKS

50. Bookrenter.com–Rent college textbooks and save up to 75% over purchasing them new.

51. ECampus.com–Find textbooks, sell textbooks, search for college supplies and college apparel all on this one site.

52. Chegg.com–A hub for students to compare textbook prices, study for exams, and choose the right courses.

53. CollegeBookRenter.com–An online resource for Renting or Selling Text books online.

RECRUITING

54. NCSASports.org–The college recruiting site for athletes.

55. BeRecruited.com–If you have a teen that’s a student athlete, they can create an online profile here and help colleges and coaches find them and be recruited.

DORM ESSENTIALS

56. DesignYourDorm.com–A free online, interactive resource for designing and organizing your college-bound teen’s dorm room.

The May 1st college deadline is quickly approaching and parents and students are making decisions about financial aid packages. Most likely, those packages will include some form of student loans–either Stafford or Perkins. Colleges also provide parents and students with private loan options to supplement the government aid when necessary.

No one wants to graduate from college loaded with debt, yet 60 percent of college students and their families borrow money each year to cover ever-rising tuition and fees, according to American Student Assistance. That’s because the average private college charges close to $40,000 a year for tuition, fees, room and board, while state universities average just over $17,000 a year. Out-of-state students at public four-year schools fall halfway between those costs, averaging just under $30,000 for the 2011-2012 school year, cited US News & World Report.

Financial aid — merit-based and need-based scholarships, grants, work-study programs and loans — has become a reality for the majority of college students.

A New Way of Life

The process of finding aid begins with completing the Free Application for Federal Student Aid (FAFSA) to determine expected family contribution (EFC) based on family income and expenses. There are 63 universities in the U.S. that claim to meet 100 percent of students’ financial need, as determined by the FAFSA. The cold hard truth is that the majority of students don’t attend these colleges and will need some form of financial aid.

Protect Yourself

While working through the process of acquiring funding for college, remain mindful of identity protection. Your soon-to-be college student can be especially vulnerable to identity theft because his or her personal data is easily accessible through grade postings, credit card applications and online transactions, according to the Dept. of Education.

Here are some ways to protect the identity of your student:

• After completing the FAFSA, log off the page and close your browser.
• Don’t use paid financial aid services that operate over the Internet or by telephone. The Department of Education offers its services for free and pages containing your private information are password-protected.
• Do not reveal the FAFSA personal identification number (PIN) to anyone, even if that person is helping you fill out the form. The only time you should use your PIN is on secure websites.
• Shred receipts and copies of documents with student identity information if they are no longer needed.
• Review financial aid award documents and keep track of the amount of student aid applied for and awarded.
• Make sure your student reports all lost or stolen identification (such as your student ID card) immediately.

Forgiveness

When your child graduates, the payoff amount on the loan may seem crushing. But your child has options: student loans, especially those connected to postgraduate professional education, sometimes can be paid off through public service. In 2007, Congress created the Public Service Loan Forgiveness Program to encourage individuals to work full-time in public service jobs. Borrowers who have made at least 120 payments on eligible federal student loans may qualify for forgiveness of the remaining balance while employed full-time by certain public service employers, according to StudentAid.gov.

If public service isn’t an option, loan repayments can be accomplished more easily by paying off private student loans before paying off federal loans.

Be Smart

Only borrow what you can afford to repay. There are numerous sites that provide student loan repayment calculators. Know your options before you borrow and educate yourself on student loan repayment. Research salaries for your career choice and always estimate using entry-level figures.

When it’s time for your children to start looking at colleges, you may be wondering how you are going to pay for tuition and other expenses. Private student loans for college may have lower interest rates than some federal loans and flexible repayment options which can help your student get the funding needed in a way that’s simpler to manage. However, your child may not have the income or credit score to qualify for student loans or lower student loan rates that are available.

Benefits of co-signing a student loan for college

Co-signing your student’s loan may open up private student loan options that would not have been available to him if he was applying on his own. Since income and credit score are important factors when banks approve private loans, and your student may not have a steady source of income or any credit score to speak of, co-signing may be the only way he can obtain a student loan for college. By co-signing, not only will you help his chances of loan approval, but your credit score could also contribute to lower student loan rates.  Plus, getting your student started with a loan that has his name on it can possibly help improve his credit score for future lending opportunities.

Information to consider before co-signing student loans for college

While lower student loan rates mean lower monthly payments for your student, you should understand the responsibility of co-signing before you make a commitment. Your child will be the primary borrower, but by co-signing you are responsible for loan payments if he defaults. Late payments could also negatively affect your credit score. Be sure your child fully understands the responsibility this puts on you, and the importance of making payments on time before you decide to co-sign. You may also want to draw up an agreement, stating he will eventually reimburse you for any loan payments you need to make on his behalf.

Look for private student loans with a release option

Since there are some cautions surrounding co-signing student loans for college, you may want to look into a private student loan that offers a co-signer release option. This allows you to co-sign, helping your child get approved and obtain lower student loan rates, but it also releases you of payment obligation after the student has made a certain amount of consecutive, timely payments. This shows the bank enough confidence in the borrower that you (as co-signer) no longer need to be included for security purposes. Make sure your child understands that once the co-signer is released from obligation, they will be solely responsible for the loan payments. Speak to a lender at your local bank today to learn more about private student loan options and how co-signing could help your child obtain financing for college.

Sponsored content was created and provided by RBS Citizens Financial Group.