2019 Hawai‘i College Guide
(Sponsored) Your guide to navigating the admissions process, financial aid applications, preparing for college, avoiding the Freshman 15, building a network and more. Plus, get an insider perspective on studying abroad.
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Manage Your Money in College
HawaiiUSA Federal Credit Union encourages families to be financially responsible when paying for school.
By Cassidy Keola
photos: courtesy of university of hawai‘i / jose magno
Parents want the best for their children, but paying for college can take a financial toll on a family. We asked experts at HawaiiUSA Federal Credit Union to share some tips to help your child stay on top of things financially during the college years.
Finding the Loan That Fits You
Taking out a loan may be an option; however, not every loan is right for every family. Here’s a rundown of the most common types of loans:
A direct subsidized Stafford loan comes from the U.S. Department of Education. These loans are available only to undergraduates who demonstrate financial need. The department pays the interest while the student is in school, for six months after leaving/graduating from school and during any deferment periods.
The other type is a direct unsubsidized Stafford loan. The student is responsible for paying all the interest that accumulates over time.
Depending on the school, students may also be eligible for a federal Perkins loan. Perkins loans are based on need, the amount of other aid received and the availability of school funds. Because of the loan’s fixed 5 percent interest rate and first-come, first-served basis, HawaiiUSA FCU marketing associate Liane Hoole encourages students to apply early.
Federal Parent PLUS loans allow parents to borrow the total cost of school attendance, minus any financial aid received. “If your credit may not allow you to get a lower rate from a bank or credit union, the PLUS loan can help you,” says Hoole.
Building a Good Credit Score For the Future
Having a healthy credit score is crucial because it can help students get lower interest rates when borrowing money for school, a car, a home and more. Building their credit early on in college is also great because the length of their credit history accounts for 15 percent of the score. So how do students start establishing good credit?
“Payment history is a factor that affects your credit history,” Hoole says. “Making on-time, full monthly payments over the duration of your loan could help improve your credit score, and skipping payments could lower your score.”
Parents can help by adding their child as an authorized user on a credit card. Hoole says that having a mix of credit types, such as a student loan, credit card and auto loan, can show lenders that students can responsibly manage credit, as long as bills are paid on time.
Avoiding Large Debt
According to Federal Reserve data, Americans owed $1.5 trillion in student loans as of the first quarter of 2018. So how do students know if their debt amount is realistic? According to Hoole, your total college debt should not exceed your total expected annual income after graduation. “Start researching how much you might expect to earn with a certain degree to see if your future loan payments will be manageable,” she says.
Before accepting loans, apply for multiple scholarships. The Hawai‘i Community Foundation’s common application allows Hawai‘i residents to apply for several scholarships through a single form. Federal grants, which are based on financial need and tuition cost, are another way to avoid debt because they don’t have to be repaid.
Filing the FAFSA
If you listen to the radio regularly, chances are you’ve heard the commercial urging students to complete the Free Application for Federal Student Aid. Administered by the U.S. Department of Education, the FAFSA allows students to receive federal, state and college-sourced financial aid. Students who complete the FAFSA may be eligible for federal grants, scholarships, loans and work-study jobs. Hoole strongly encourages students to submit the form as early as possible, as awards are presented on a first-come, first-served basis.