You have read the brochures, you have made your college choice, now comes the tough part of determining how you are going to pay for your college education. If you are like most students, you are not independently wealthy and so you start looking at student loan applications. This is the way that the vast majority of college students fund their college education. But there are multiple things to consider in this scenario which indicate that although this may be the easiest way to finance it, it may not be the best way, and you will not know that unless you have investigated the options.

A recent news article stated that most college financial aid offices maintain a list of preferred lenders. These are lenders who have worked out something with the college to make the loan application process and loan approval process as easy as possible, both for the student as well as the college accounting office. But this article encourages students to look beyond the list of preferred lenders that the college provides, since from a total and overall financial aspect, this may not be your best option.

One of the things stated in this article is that some of these lenders are so desperate to get on this preferred list that they add certain "sweeteners" to the college administrators in return for being put on this list. These sweeteners include things like stock options and all expense paid vacations to exotic destinations. While that is certainly not the norm, there is no way for you to determine which ones may have done this simply by looking at the list of potential lenders on the college’s preferred list. The sad thing is that although these companies are on the preferred list via these tactics, that fact means nothing in terms of the value or expense of the loan they are providing.

Some of these lenders also offer incentives to choose them. For example, some offer a 1% reduction in the interest rate after 48 on-time payments, and others offer a 1% reduction in principal after 48 on-time payments. While that may sound good on the surface, you need to look at what this really means. In the first case, it is the same as lowering your interest rate by 0.33%, and in the second case, it is like lowering your overall interest rate by 0.12%. In other words, if you don’t do the math, you will not realize that what they are offering is basically nothing.

Correct me if I am wrong, but wouldn’t the ideal way to finance your college education be a way where you got funding to pay for part of all of your tuition and/or books and/or housing expenses, and not have to pay it back, ever? That can be done, yet few students are aware of it or take advantage of it.

The method I am referring to is college scholarships. There are a truckload of college scholarships available for virtually any student. The student does not need to be an athletic superstar or musical protoge or have a squeaky clean GPA. In fact, many of these scholarships do not even require the student to have a financial need in order to qualify for it.

Even stranger is the fact that out of all the college scholarships available, a good number of them go unawarded each year simply because nobody applied for them! If the Tiddly Winks Foundation is willing to give you money for college, do you really care what the source of this funding is?

Investigate the avenue of college scholarships. The only thing it will cost you is the stamp and the time to fill out the application, which is time well invested.