Access State of Virginia Student Loan Resources

Federal vs. Private Aid Programs

Student loans can make or break not only your college education, but your life over the 10 or so years following your graduation. Why? What many students fail to really consider while choosing loan strategies is the 10 + years of loan repayment once the euphoria of your college experience suddenly ends. Here is where many lenders realize they can hook you into financial decisions based on short-term vision and immediate gratification. For example: federal loan vs. private loan.

The State Council of Higher Education for Virginia (SCHEV) is one of those state agencies that may not be as visible as those in other states, but the mission is the same—deliver the real picture on student loans for Virginia students.

Types of Loans and How To Leverage Them for College

You’ll likely find three types of college loans:

  • Federal student loans, available in two distinctly different programs: Direct Loan Program and the Federal Family Education Loan Program (FFELP).
  • State sanctioned student loans usually provided through state higher education agencies, sometimes called “alternative” loans.
  • Private student loans from commercial student loan providers and personal lending institutions.

Students and parents, you have access to the federal student loans, most commonly the FFELP. But you also have access to scores of lenders hawking private loans. And if you live in a state that sponsors its own alternative loan program, then you have that as an added bonus. So which gets top priority?

The Paying-for-College Strategy for Virginia Students

There is a right way and a wrong way to pay for college. Few Virginia students can afford to pay out of pocket for college, therefore student loans are commonplace. The three types of student loan programs outlined above are placed in the order in which you should employ them for financial leverage. This order: FFELP first, state loans second and private loans a last resort, is designed for the least financial impact.

The Federal student loans should come first for their low cost, government guarantee and wide availability. BUT you must complete and file the FAFSA, Free Application for Federal Student Aid, to be eligible. Another reason to apply for federal loans: many other types of loan programs, even scholarships and grants, require you have applied first for your federal aid.

When it Makes Sense to Use a Private Loan for a Virginia Education

For many students federal student loans don’t get the whole job of paying for college done. When your education hangs in the balance due to a financial short-fall, that might be the right time to consider a private student loan.

For more information on student loans and financial aid for Virginia students visit the SCHEV website.