Be your members’ college financing hero

The 2024-25 Free Application for Federal Student Aid (FAFSA)’s so-called simplification has been nothing short of a nightmare for families with college-age kids. The stress is palpable this year as critical information about financial aid packages has been significantly delayed.  Many students have been stuck waiting for clarification at a time when they normally would be selecting and committing to a college.

Ask any member with teens and it will quickly become clear that credit unions need to be helping families navigate the confusing and stressful college planning process. And most importantly, offering a loan solution that helps them bridge the financial gap that often remains after family savings, scholarships, and federal student loans have been exhausted. As we know, credit unions put members first and can often provide greater flexibility in their funding options.

How can credit unions be college financing heroes?

Like other major financial decisions, it all starts with education. College is a big investment, which is why it’s important for members to know their options, plan ahead, and choose wisely when paying for it. After completing their FAFSA, members should follow the “free, cheap, gap” method to responsibly pay for college, and set themselves up for a strong financial future down the road.

Here’s a quick review:

1. “Free” money first – Scholarships and grants 

We always advise members to take advantage of scholarships and grants first, which cost students nothing and do not have to be repaid as long as they meet their conditions. In other words, these equal FREE money for college. Most times this free money is not enough to cover all the costs, so members will also need to look into options for student loans.

2. “Cheap” money next – Work-study programs

This is a form of federal aid that allows students to work part-time jobs on campus to supplement their payments towards education expenses. Examples of these sorts of positions include library staff, IT specialists, office assistants, etc.

Jobs are usually community-oriented or relate to a student’s field of study in some way, though not every school participates in this program. Students should do some research to see if their school provides this as an option.

3. Federal student loans come next

After scholarships and grants, families should explore federal student loans that come with benefits not available from other types of loans. These are typically offered within the award letter from each college. Before taking out any loan, consumers should be aware that a loan is a legal obligation that they are responsible for repaying. Learn more about the types of federal student loans that may be available: https://studentaid.gov/understand-aid/types/loans

4. Filling the “gap” with private student loans

When scholarships, grants, and federal student loans aren’t enough, members may need to consider private student loans. Private loans are made by private organizations such banks, credit unions, and state-based or state-affiliated organizations, and have terms and conditions that are set by the lender. Because offerings will vary, it’s important to review the rates, terms, and conditions before applying for a private student loan.

A flexible solution to help ease crunch time woes

CU Student Choice’s private education line of credit allows students and families to establish their line at any time—even if they’re unsure of their final amount needed or the school they’ll be attending—and then return later to complete the process. This flexibility is unique and could prove critically important to families waiting in limbo this academic year and help fast-track their approval process during a tight timeline.

This year’s FAFSA is full of problems, but credit unions can be part of the solution. Contact us to learn more about how CU Student Choice can make it simple to offer customized student lending solutions that benefit your current and future members.