Student Loans Overview
Students and parents relied on more than $62 million in loans for the 2004-05 academic year, according to the College Board. However, U.S. Census Bureau statistics show that people with a bachelor’s degree earn, on average, over 62 percent more than those with only a high school diploma. So getting an advanced degree is expensive, but your investment has relatively high returns. How will you and your family get the right loans that enable you to enter the school of your choice and NOT be hampered by high debt payments after graduation?
This Trusty Guide will take you through the student loan process, step-by-step. Feel free to jump to sections using the Table of Contents on the right or read through the whole guide. Below is a summary of key takeaways from the guide.
|Determining Your Need
- Figure out your general college costs, including tuition increases, books and lab fees, and any other incidental expenses.
- Fill out the FAFSA form as early as possible every year to maximize the aid you’re offered.
- Student loans need to be repaid. Forms of financial aid that don’t need to be paid include grants and scholarships, so take full advantage of those.
|Federal and State Student Loans
- Stafford loans are offered to nearly all students; subsidized versions are need based, while unsubsidized versions are not. The interest rate is usually very low and the repayment schedule is flexible.
- Perkins loans are a great option for students showing exceptional financial need.
- State loan programs vary, but may offer similar programs to the federal loans.
- Whenever possible, always choose a subsidized loan over an unsubsidized one, to save yourself money in interest payments.
|Alternative Student Loans
- Some colleges may offer their own private loans, which vary widely on interest rates and terms.
- Some of the most popular commercial loans are offered by TERI, SallieMae, and Nellie Mae.
- When considering and alternative student loan, shop around and compare prices, fees, terms, to get the best deal.
|Bad Credit Student Loans
- Stafford and Perkins loans are not credit-based, and will probably offer you the best rates.
- Alternative loans may also be an option, but be sure to shop around and ask questions to get the best deal.
- You may need to get a cosigner with a good credit rating, but be aware of the ramifications.
- You may need to put education on hold and rebuild your credit before getting a loan. However, once you do get a student loan, responsibly repaying it will improve your credit score.
|Consolidating Your Student Loans
- Consolidating all of your smaller loans into one large loan may lower your interest rate and also simplify your monthly payments into one easy payment.
- You can only consolidate your loans once, so consider your options carefully before you do it. Benefits may include a lower interest rate, ease of payment, and flexible payment options. However, you could also get locked into a high interest rate and lose the potential for forgiveness on certain loans.
- To get started with the consolidation process, speak to a financial aid officer at your institution or a lender.
|Repaying Your Student Loans
- If you owe federal money, you will be required to attend a financial counseling seminar before graduating.
- Typical repayment plans include: standard, extended, graduated, and income-sensitive. Think carefully about which option will be the best for you and your budget.
- If you are having trouble making payments, get help! If you default, it could ruin your credit score and also rack up additional late fees.
- Deferment, forbearance, and forgiveness are all potential ways of dealing with difficulty paying. Talk to your lenders to see what your best option would be.
Use this Trusty Guide to arm yourself with the knowledge to navigate the student loan process and make the right choices. Read on to get started!