While navigating future dreams of career and success, students are often left bewildered and surprised by the costs of post-secondary education. While we all recognize that college and university degrees can offer opportunities we would otherwise miss, it can be daunting to imagine ourselves spending so much money on them.

Most students find that loans are a necessary reality when pursuing post-secondary attention. Although savings and scholarships will certainly contribute, loans can be a way to invest in the future even when you haven’t yet found ways to put money away for it. Student loans are competitive and you can find the best choice for you by considering several different options.

There are a few common loan types that you will want to investigate, including federal loans, personal loans, and consolidation loans. And as with any loan, you will need to consider the interest rate as well as loan limits and fees, and especially terms. By understanding terms you will know when it is time to start repaying, and avoid late or missed payments.

Typically interest rates are lower on federal student loans then on personal loans, which are awarded by banks and other lending institutions. Typically personal loans start incurring interest immediately and may require you to make loan repayments immediately, whereas federal loans often allow a term that includes at least the length of your post-secondary program, and perhaps several months after. With the longer term provided by federal loans, you can get some extra time to find a job after school.

Personal loans may also require a cosigner, such as your parent, and may not have the options for deferment and forgiveness that federal loans do. While private loans can be a life-saver when federal loans and other methods are not possible, it is in your best interest to try for federal loans first.

Consolidation loans are typically used when you want to refinance your student loans, either because the minimum payments are too high, or because you can save on interest rates. Keep in mind that consolidating to extend your repayment will create more costs in the end as the interest will continue to accrue. Any gain in interest may not be worthwhile, and for federal loans in particular, you are likely already getting the best rate. Finally, consolidating your federal loans can mean you lose options relating to deferments and forgiveness, so be sure if you go that route you can make your new payments on time, every time.

Don’t Make This Mistake

Don’t make the mistake of simply missing payments back on your student loans when the time comes. This is called a "default", and has some severe penalties. If it occurs, your loans may be turned over to a collection agency which can incur court costs and attorney fees you may end up responsible for on top of your loans and interest. Your wages could be garnished, your tax refunds and other government benefits could be intercepted, you won’t be eligible for other federal aid, and perhaps most importantly, your credit record will be damaged badly. A bad credit report can prevent you not only from obtaining auto loans, mortgages, and credit cards in the future, it could also result in job applications and rental applications being denied.

Instead, if you find yourself in trouble, there is help out there. You may be able to postpone repayments using deferments, or be eligible for forbearance. In forbearance you can postpone your payments although interest will continue to build up on your loan. Special aid may be available when you make regular payments, even if you have negotiated smaller payments than originally agreed. By being honest and making a real effort to get out of default, you can show the lender you are willing to make it right with a little help from them.

You may also qualify for loan forgiveness through a few volunteer organizations. Here you will be required to help out through volunteer work, military service, teaching, or practicing medical assistance. Some schools will help you with forgiveness if you are within certain fields such as law enforcement, nursing, law, social work, education, etc. Consider looking into AmeriCorps, Peace Corps, the Army National Guard, or asking your student counselor to help you with managing student loans.

Other Options – Scholarships and Savings

Scholarships are one option that may be available to you. These forms need never be repaid, and are often awarded for special achievements, whether athletic, artistic, or academic. You may also find scholarships for studying in certain fields or if you are part of an under-represented group. Finally you can take a look at scholarships offered for exceptional community service such as volunteering.

Be sure to investigate what scholarships you can apply for by speaking to your guidance counselor. Or you can begin your own scholarship search. FastWeb is a free online tool, where you can fill out an application to search for awards that can apply to you. Be aware that some companies will try to charge you for scholarship searching, and should be avoided. Doing your own research or speaking to your guidance counselor can provide all the same results without the cost.

College savings are ideally started by your family while you are very young. A substantial fund can be created even with a small, regular amount. For example, $50 put away each month from birth can lead to a savings fund of about $20,000 if one assumes a reasonable return of 7% on investment. While you can certainly borrow for university later, you will be paying interest on what you borrow, whereas if you save in advance you will earn interest yourself.

When opening savings funds be sure to shop around for the best options for you. Higher interest accounts may be available, and there are often government programs that supplement savings by paying a percentage of what you’ve contributed. By setting an automatic transfer from your regular checking account to savings you can still see your account start growing, and you’ll likely not even notice the money being gone. And take advantage of the advisors at your favorite bank – they will be happy to set up an appointment with you to discuss your best options. It’s never too late to start saving and by doing so you can avoid costly interest later.

If you’ve ever considered joining the armed forces, or served in the past, you will that there are many bills and assistance methods you can take advantage of. The Montgomery G.I. Bill allows the Air Force, Army, Coast Guard, Marine Corps, and Navy to offer up to 3 years of education benefits to veterans. The Armed Forces Tuition Assistance Program may cover up to 100% of the cost of your program at accredited colleges, universities, and technical schools. Each branch of the armed forces can provide tuition assistance above and beyond the Montgomery G.I. Bill, or repay existing loans. Finally there are Service Academies, and training corps programs that allow you to seek higher education while serving the nation.