DALLAS (CBSDFW.COM) - For many people with student loans, July 1 brings a painful lesson. Interest rates on some student loans have now doubled, and it is up to lawmakers to hammer out a compromise and lower them again.
Tim and Karla King are thrilled that their two sons are both in college, but they are much less thrilled about the cost. "I'm very proud of them and very excited with what's happening with them," said Karla King. "We set aside money as well as we could but, when you get to the real picture and you're there, you kind of go, 'Well, hmm, okay, that's not quite enough money.'"
The mandated hike in subsidized student loan interest rates only makes matters worse.
However, college planner Kevin Campbell offered some tips to help families and students save money.
First, take your time when applying for Federal Student Aid and do not be afraid to ask for professional help. Simple mistakes could cost you tens of thousands of dollars later. "You shouldn't include your retirement assets on the FAFSA. You shouldn't include your home equity on the FAFSA," said Campbell.
Second, consider a private college. While it may sound more expensive, the net price can be surprising. "If you can qualify for the merit aid, if you can qualify for the financial aid, we often see them get down to the same price as a state school, and sometimes even cheaper," added Campbell.
Finally, see what costs can be cut from the extra college bills and fees -- things like campus meal plans and having a car. These are added costs that could not be necessary after a few adjustments and proper planning.
Meanwhile, the King family knows that they have a tight budget until the boys receive their college degrees. But it is often necessary to make some financial adjustments during this costly part of life. It will be worth the price. "The priority needs to be their education," said Karla King.
"You're going to be able to take this education and have a better life for yourself," added Tim King. "Instead of how much it's going to cost, try and focus on the upside of that."
The new rate for subsidized goverment loans is 6.8 percent. Student loans are second only to mortgages as the largest debt that consumers carry. In 2011, students owed nearly $27,000 in loans, on average.
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