Financial Words of the Week: Back to School – Student Loans / FAFSA
Back to School Series
There are different types of student aid that come from various sources. Aid can be in the form of grants (money that is not required to be paid back) that come from schools, private organizations or even from the state and federal government. Some students enter work-study programs that allow them to earn money towards their education as another type of aid. The most common form of aid comes from student loans.
Student loans are funds that are made available for students and guardians to pay for education expenses. It is important to note that, like all other loans, student loans are required to be paid back. However, many student loans offer a deferment period‡ that eliminates the need for payments while a student is in school. There are some loans that are subsidized, so that while a student is in school, the loans don’t accrue interest that the student will have to pay. The federal government is actually paying that interest, not the student. There are also unsubsidized loans in which the interest accrues while the student is still in school. There still may be the option to utilize in-school deferment, but the interest adds up the entire time the loan exists.
Sometimes it can be difficult to know where to start and which form of aid you may be eligible for. That is where Free Application for Federal Student Aid (FAFSA) comes in. The FAFSA is a form developed by the federal government that helps determine what types of aid students qualify for. Most colleges require that you complete the FAFSA when applying for financial aid. Visit FAFSA’s website‡ to find out more details.
Remember to also work with a bank partner or trusted financial advisor, your high school guidance counselor and your college admissions office to understand if there are any additional resources for your education expenses.
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UMB Financial Corporation (Nasdaq: UMBF) is a financial services holding company headquartered in Kansas City, Mo., offering complete banking, payment solutions, asset servicing and institutional investment management to customers. UMB operates banking and wealth management centers throughout Missouri, Illinois, Colorado, Kansas, Oklahoma, Nebraska and Arizona. It also has a loan production office in Texas. Subsidiaries of the holding company include mutual fund and alternative investment services groups, single-purpose companies that deal with brokerage services and insurance, and a registered investment advisor that manages the company's proprietary mutual funds and investment advisory accounts for institutional customers.