(Radio Iowa) – The fall semester won’t start for several weeks at the state’s colleges and universities, but now is a key time in the financial planning process. The C-E-O of Iowa Student Loan, Steve McCullough, says parents and students need to do some research when it comes to student loans. “This time of year when people get their award letter, and they see the amount that students are going to get in scholarships and grants and the amount that students can pay using their own student loans. But then there’s this bottom line, which is the amount that the parents and families is supposed to pay,” McCullough says.

He says there are federal student loans, private loans, and the loans offered through the Iowa program. “The Federal Direct Plus loan has a really high interest rate, it just reset. They don’t publish an A-P-R, but we estimate it’s going to be about eight-point-five percent (8.5). And if you think about that, that’s a really high rate for a loan these days,” McCullough says. “In comparison, the highest rate that I-S-L education lending offers, in our state-based program that was authorized by the legislature is an A-P-R of seven-point-four percent (7.4%). He says the state loan could save a family one-thousand dollars over the life of a 10-thousand dollar loan. McCullough says their website at iowastudentloan.org can help you see your options.

“We actually do a side-by-side comparison with the Federal Direct Plus loan. And there are other features different repayment options, different other things to consider as well, besides the interest rate, and we want people to recognize those two and make the choice that’s right for them,” he says. There’s been a lot of talk from the Biden Administration about forgiving student loans. McCullough says the shouldn’t be a factor in any student loan decision right now. “It may not apply to parents that are currently borrowing for their students for this fall, and so we don’t want them to be distracted by that we want them to really be considering the factors that matter, so they can try and borrow less money,” he says.

McCullough says there are things students can do to reduce the amount they need to borrow. “They can work while they’re in college, they can try and lower their living expenses. So that it doesn’t cost that much for them to be at college. There’s lots of things that they can do. And the less they borrow now, the less they have to repay later,” McCullough says.

He says if you base your decisions on the facts at the time and really take the time to do your research and understand that interest rates and the other factors you can make a difference in how much you end up paying in the long run.