"I'd rather pay back myself than somebody else," Walker said.

Jurek said that, unlike Stafford loans and other government-backed student loans, private college loans aren't regulated, so parents should ask a lot of questions.

"What's the interest rate? How often does it reset? Does it accrue interest while in school, require co-signers? Are there fees?" Jurek said.

Also, the U.S. credit crunch has put a lot of student loan makers out of business. Walker said federal rules changes have made student loans less profitable, so many smaller lenders closed up shop. Most students loans going forward will come from large, national banks that can absorb the costs, Williams said. Students who had a loan last year may want to check with their lender to make sure they'll be offering loans next year.

Whether it is loans or scholarships, only do business with reputable companies. The Federal Trade Commission offers some telltale signs that a scholarship offer could be a scheme:

  • It guarantees a scholarship or your money back.
  • It says you can't get the information anywhere else.
  • You're asked for your credit card or bank account number to hold the scholarship.
  • The offer says your scholarship will cost some money.
  • You're told you've been selected by a national committee or that you're a finalist in a contest you've never entered.

"If you don't remember anything else, remember the fact that you don't have to pay for scholarships," guidance counselor Karen Clark told Omaha television station KETV.

More Money Sources

Federal Pell Grants: These monies are not paid back. The federal program provides need-based grants to low-income students. Students may use their grants at any one of approximately 5,400 schools. Grant amounts depend on family contributions, the cost of attendance, enrollment status and whether the student attends for a full year.

Federal Supplemental Educational Opportunity Grants: These are for undergraduates with exceptional financial need. Pell Grant recipients with the lowest expected family contributions will be the first to get FSEOGs. Just like Pell Grants, FSEOGs don't have to be paid back.

Academic Competitiveness Grants: These are awarded to students who can demonstrate that they completed a rigorous high school program before enrolling in college. Eligible students receive up to $750 in their first year of college and $1,300 for the second year if they also maintain a 3.0 grade point average. This grant is awarded to students over and above any other grants or scholarships.

National SMART Grant: These provide up to $4,000 for each of the third and fourth years of undergraduate study to full-time students who are eligible for a Federal Pell Grant and who are majoring in physical, life or computer sciences, mathematics, technology, engineering or in a foreign language determined critical to national security.

TEACH Grants: These teacher-incentive grants provide up to $4,000 per year to students who intend to teach in a school that serves students from low-income families.

Federal student loans: These loans supply help for students enrolled at a school that participates in federal aid programs. These loans are offered by private organizations under guidance from the U.S. Department of Education.

Stafford Loans: These are federal student loans made directly available to college and university students and are used to supplement personal and family resources, scholarships, grants and work-study. They may be subsidized by the U.S. government or may be unsubsidized, depending on the student's financial need.

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