Find the Key to College Funding
Student Loans from Keybank
KeyCorp is the parent company of KeyBank, which is based in Cleveland, Ohio. KeyBank was created following a 1994 merger between KeyCorp (then located in New York) and Cleveland bank Society Corporation. Society has a long history, starting in 1849 as the Society for Savings and functioning as a mutual savings bank, which limited its operations to retail banking (that is, offering financial services to consumers only rather than businesses).
The mutual savings structure gave Society a great deal of stability during the Depression, and during that period Society developed its first school savings program. KeyBank is now among the top twenty banks in the U. S. in size, but has stopped offering any student loan products, due to problems with its trade schools partnerships. Rather, it confines its activities to providing information on planning for college and referring students to various federal loan programs.
Help With College Planning From KeyBank
KeyBank has been introducing students to the mechanics of personal finance for almost a hundred years now, so their advice on planning for college carries the weight of vast experience. Three easily avoided pitfalls flagged by KeyBank are:
- Credit cards. If you’re expected to cover this bill yourself, be extremely careful in using credit, because it’s very easy to pay the minimum monthly amount rather than your full balance. That leaves you with mounting debt, including interest payments you could have avoided, and if you don’t reserve your credit cards for true emergencies you can find yourself in need of an item or service you cannot purchase.
- Moving off campus. While communal dormitory life can be restrictive, having reliable housing while involved in classes is invaluable. The same is true of the paid meal plan: although providing for yourself can sound amusing, your first attempts at budgeting can leave you without ample food at month’s end. Let your school take care of that task while you have the opportunity.
- Taking more classes than you planned. Many students explore different fields, and there is no better time to do that. But if all the classes you take do not count toward the degree on which you eventually decide, your total tuition expense may be higher than you had originally planned. Build a few extra classes into your financial plan.
KeyBank offers a step-by-step guide to college planning here.
Financial Aid Recommended By KeyBank
In addition to student loans, KeyBank suggests you find every possible means of defraying your school costs before turning to loans. First, apply for gift aid, meaning scholarships and grants which require no repayment. In this category, two important federal grant programs for students with financial need are mentioned by name: Pell and FSEOG.
Pell Grants and FSEOG
The Pell Grant program is designed to help students who can demonstrate financial need by submitting the Free Application for Federal Student Aid (FAFSA), which calculates your Expected Family Contribution (EFC). Need is defined as the amount remaining when your EFC is subtracted from your cost of attendance at college.
While every student who qualifies for a Pell is guaranteed to receive one, the FSEOG (Federal Supplemental Educational Opportunity Grant) works differently. It is designed to help students who have what is called exceptional financial need remaining after a Pell grant has been used, and it is distributed through participating schools rather than by the U. S. Department of Education. Each school has a limited amount of funds to go around, and applications showing the most remaining need receive priority.
The second recommended method of tackling school expenses is employment with the Federal Work-Study (FWS) program, which is tailored to students’ schedules. You will never be paid less than federal minimum wage, and you may make more, depending on your duties. FWS jobs are available both on and off campus, and they bear some relation to either your course of study or general community service.
Family Payment Plan
KeyBank’s third recommendation is a monthly payment plan worked out between your family and your school. The temporary credit extended is not considered a loan and does not draw interest, but usually a small service fee is charged. By the time your review of KeyBank’s planning materials reaches this option, you should see how pulling together a network of financial support drawn from various sources can cover your college costs.
Federal student loans should always be your first choice in borrowing for school, because of their lower interest and more flexible repayment plans. The Direct Loan program offers both subsidized and unsubsidized loans, which do not require a credit check. Direct PLUS loans do have a credit history standard, but will accept a creditworthy cosigner as an alternative.
The federal loans that carry the lowest interest rate (5% in 2013) can be found in the Perkins loan program, which is reserved for financially needy students. Like FSEOG, the Perkins loans are made through individual schools, and funds are limited.