What Every High School Student Needs To Know About Student Loans For College Ranger student loan
The final year of high school is a great time of transition and change, and this year, feelings of uncertainty about the future are undoubtedly heightened amid the coronavirus pandemic and economic crisis. In particular, the decision to borrow or not student loans funding your next steps after you graduate can be a major source of anxiety.
Like a high school senior considering college, it can be pretty hard to think about where you see yourself next year, let alone the next 10 or 20 years. For many young people, student loans are their first financial product, so borrowing can feel like learning a new language. It may make you wonder how it is even possible to make the smart financial choices that will allow you to be successful in the future. Fortunately, you don’t have to be an expert to be a smart borrower.
Before you even think about student loans, be sure to exhaust all other forms of financial assistance that you don’t have to pay back. In addition to financial aid, your school counselor can be a great resource for finding scholarships, especially local ones.
If you exhaust these options and still need money to cover tuition and living expenses, you should consider student loans. When making your decision, keep these five facts in mind:
- Student loans must be repaid with interest.
- Federal student loans should be your first choice.
- You don’t have to accept every loan that is offered to you.
- Entry and exit advice is very important.
- You can make payments while you are studying.
Student loans must be repaid with interest
When you borrow student loans, you agree to repay that amount in full plus accrued interest. You still owe this money even if you don’t graduate or graduate, are unhappy with your education, or have difficulty finding a job.
While there are limited circumstances in which you can have your loans canceled or canceled, in most cases you can expect to pay back. In general, you should never make a borrowing decision with the forgiveness of the loan in mind. An exception is the federal Public service loan remission program, which offers loan forgiveness after 120 qualifying monthly payments into a qualifying repayment program while working for an eligible employer.
Once your student loans start to pay off, it’s important to avoid falling behind on payments. Drop your loans delinquency or default can lead to serious consequences, such as borrowing difficulties in the future, high debt collection costs, and possible wage garnishment – a legal process in which an employer must hand over part of your income to repay your debts.
Federal student loans should be your first choice
If you determine that you need to borrow to pay for your education, exhaust your federal student loan options first. These loans tend to have the lowest interest rates, the best benefits for the borrower, and the most collateral in place to keep you from going into default or default if you are in financial difficulty.
Filing the Free Federal Student Aid Application, or FAFSA, should be the first step in the financial aid process. It determines your eligibility not only for federal student aid such as the Pell scholarship, but also for many forms of state and institutional aid. You must also file the FAFSA to be eligible for federal student loans.
There are two types of federal loans for undergraduate students: direct subsidized loans and unsubsidized loans.
Subsidized loans are intended for students with proven financial need. The federal government pays interest on loans while the student is enrolled in school at least part-time, during the six-month grace period after the borrower has left school, and during periods of ‘adjournment.
Unsubsidized loans are available to all eligible students, regardless of their financial needs, and borrowers are responsible for interest from the time the loans are disbursed, including while they are deferred. The borrower will have to pay this interest when the loans go into repayment, at which time the interest will be added to the amount borrowed. It’s called capitalization, and it increases monthly payments as well as the loan balance on which future interest accrues.
If you are reaching your borrowing limits for both subsidized and unsubsidized student loans, you may want to consider private lenders, which include banks and public and nonprofit credit unions. Always compare several options, find out about the borrowing benefits the lender can offer, and consider the overall amount you are borrowing. You are not allowed to borrow more than your attendance fees, which is calculated by your school.
You do not have to accept all the loans that are offered to you
As a student, you can borrow up to the tuition fee minus other aids to pay for tuition and related education expenses such as room and board, transportation, books and more. eligible expenses. But you don’t have to borrow everything you’re entitled to unless you really need to.
Once you are accepted to the institution of your choice and submit your FAFSA, your school will send you a financial reward letter which lists your eligibility for any assistance, including federal student loans. The letter will usually tell you the maximum amount you can borrow, but it’s not always clear when you can borrow less.
If you don’t need to borrow the amount stated in your award letter – for example, you may consider finding a part-time job to pay for your living expenses or your books – then you can decline surplus funds. This will save you money over time, as you won’t have to pay back the money you didn’t borrow and the interest that would accrue on it.
If you have questions about your award letter, contact a financial aid administrator at that school.
Entry and exit advice is very important
You might be tempted to quickly skim through the entry advice required when accepting federal subsidized or unsubsidized loans and the required exit advice when you leave school before repayment begins. However, the self-guided sessions are important because the information is intended to ensure that you understand the terms and conditions of the loans you take out as well as your rights and responsibilities. You also learn the basics such as how interest works.
Importantly, you will also learn more about your reimbursement options, which is vital information to have in case you run into financial difficulties and need to lower your monthly payments with an income-based repayment plan.
Make sure you get the most out of entry and exit advice blocking out at least 30 minutes of quiet, uninterrupted time and taking notes as needed. If you have any questions, write them down and contact a financial aid administrator at your college.
You can make payments while studying
If you decide to borrow direct unsubsidized federal student loans, remember that you are responsible for paying off any interest that begins to accrue from the time the loan money is paid. To avoid additional capitalization costs, you can choose to pay interest while you are at school. Contact the loan manager for information on how to do this.
It’s easy to see why it’s essential to think carefully about how much you borrow for college and how much money you can expect to earn upon graduation. The federal government offers many free resources that can help you, including the U.S. Department of Education University Scorecard, which can help you assess and compare college costs, and the Your Financial Path to Graduation from the Consumer Financial Protection Bureau, which can help you estimate how much you owe and if you can afford that debt.