Most People Dont Have Student Loans
Student loans are not as popular as headlines suggest. There are approximately 250 million adult Americans. Of this group, only 45 million people have student loans. That means approximately 80% of adult Americans dont have student loans, didnt go to college, or already paid them off. So, any plan to cancel student loans wouldnt directly benefit most Americans. Instead, student loan cancellation would be targeted at roughly 20% of the adult population. .
How To Use Student Loans For Off
Its actually really easy to use student loan money for housing and other living expenses. Just be sure to spend the money on only the things that are absolutely necessary.
Heres how you do it:
Good money management practices can make your student loan funds stretch further so you can borrow smaller amounts or use some of what you borrowed to make optional loan interest payments while in school.
College Decisions Are Due May 1 We Can Help
Learn the difference between subsidized and unsubsidized federal loans when you apply for a Federal Direct Loan, previously called a Direct Stafford Loan.
Find helpful information about the different federal student loan options for college. Compare federal and private loans and choose the loan that best fit your needs.
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Basic Steps To Getting A Federal Student Loan
Applying for a federal student loan starts with completing and submitting the FAFSAFree Application for Federal Student Aid. This form collects your familys financial information in detail. After submitting the form, they then calculate how much financial aid you qualify for, based on the information provided.
The financial aid package offered to every student typically includes a combination of student federal loans, grants and financial assistance from the school. This package is different for every student. Your financial aid package and federal student loan offered will be tailored to your unique circumstances.
The most important thing to keep in mind when filling the FAFSA is to make sure that the information you provide is accurate down to the smallest details. Submitting the wrong information will void your application and you risk losing any loan that you may be eligible for. If your circumstances change any time after you submit the application, which is entirely possible, then there is a provision for you to provide your new details.
What Is The Difference Between Scholarships And Grants
The federal government gives grants like the Federal Pell Grant and the Federal Supplemental Education Opportunity Grant based on financial need. There are also grants specifically available for African-Americans, single mothers, and women. Other grants are offered through your specific state. Students can find out if they are eligible for various grants after filling out a FAFSA.
Scholarships are given mostly on a merit basis, but award money is also dispersed to students in financial need. Scholarship money goes directly to the student or school to offset tuition costs and other college expenses. There are thousands of scholarships available for everything from left-handed students to online students. Reward money is sometimes given to students who demonstrate the financial need or to minority groups.
Nonprofits, individuals, and associations also give out scholarship money throughout the year. On average students attending public, four-year colleges, at all income levels, received $9,740 for the 2011-2012 school year in grant and scholarship aid, according to the Department of Education.
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Understand The Different Types Of Federal Student Loans
There are a few different options when it comes to federal student loans, and its important to know the details of them.
- Direct Subsidized Loans Undergraduate students who demonstrate financial need can pursue these loans. The federal government pays interest while the student is still in college. Perkins Loans and Stafford Loans, both come under this category.
- Direct Unsubsidized Loans All undergraduate and graduate students can look into Direct Unsubsidized Loans. Demonstrated financial need is not a criterion. Unsubsidized Stafford Loans come under this category.
- Direct PLUS Loans These are slightly different in that they are not available to undergrad students. Only graduate students, professional students, and parents of dependent undergraduate students can apply for these PLUS Loans to help pay for those education costs not covered by other financial aid. Another difference is that the borrowers credit history is a factor in getting approval.
Before taking any student loan, federal or private, it is important to do your research and understand the terms and conditions of the different types of loans as well your payment obligations in order to prevent disastrous debt-related problems later.
And if federal student loans and scholarships dont cover the entire cost, you need to find the right private loan. Use College Raptors Student Loan Finder to compare lenders and interest ratesfor FREE!
How Student Loans Work For Living Expenses
Undergraduate, graduate, and professional students are all able to use student loans for living expenses. Student loan funds are typically disbursed directly to your school to cover tuition and fees. Any money left over will be refunded to you, which you can use to pay for housing and any other education-related costs.
Keep in mind that both federal and private student loans have their own student loan requirements. To qualify for federal student loans, you must have financial need and be enrolled at least half time at an eligible school. With private student loans, youll typically need good credit and verifiable income to qualify though exact requirements can vary by lender.
Tip:
If youre struggling to get approved for a private student loan, consider applying with a cosigner to improve your chances. Even if you dont need a cosigner to qualify, having one could get you a lower interest rate than youd get on your own.
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Use Grant Or Scholarship Money
Some forms of financial assistance may have limitations on how you can spend the money but not all do. Be sure to look at the details of all the forms of financial aid you’re receiving. Federal Pell Grants may be used to purchase laptops, however, you may get the funds in a roundabout way. Pell Grants are paid directly to your school for tuition and fees. If there is money left over, you may be issued a refund check, which you can then use to purchase educational supplies, including a computer. However, remember that refund checks from student loans do need to be paid back, just like the rest of the loan. You may still be able to use those dollars for school expenses, just remember they will be tacked onto your student loan balance.
How To Ask For More Financial Aid For College
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What Happens If You Use Student Loans For Something You Shouldnt
Financial aid offices dont track exactly how students use their funds, so its unlikely that youll get in trouble for using your financial aid or student loans in cases where you shouldnt. But if you spend more money than whats budgeted in your schools official cost of attendance, you could end up with fewer funds than you need to pay for other expenses such as college textbooks or fees.
Additionally, if your financial aid office finds out that youve spent funds inappropriately, you could:
- Be reported to the Department of Education
- Have your funds taken back retroactively
- Be responsible for paying back what youve already used to the school
Theres also a slim possibility that you could be investigated and prosecuted for abusing student loan funds if your financial aid office finds out so be sure to spend your funds appropriately.
Tip:
If youre worried that youve already used some of your funds in the wrong way, chalk it up as a lesson for how not to spend funds in the future. You could also consider saving money from a job or other income source to replace those funds.
Learn More: How Do Federal and Private Student Loans Work?
Emergency Aid Grants And Scholarships
Many colleges offer help besides loans to students with emergency financial needs, according to the NASPA study. This could include:
- Campus vouchers to help cover on-campus costs like books and dining hall meals.
- Completion scholarships or grants, which can forgive a portion or all of the outstanding balance that might otherwise keep a student from advancing or graduating.
- Grants to help students experiencing hardships, which might require proof of hardship or emergency.
- Food pantries to ensure students dont have to go hungry.
Check with both your financial aid and student support offices, which oversee and administer most of these emergency aid programs.
Lastly, dont forget about non-institutional and non-federal student aid. There might be funds from alumni-funded foundations or other nonprofit scholarships or grants that can provide emergency assistance. Ask your financial aid administrator for help and research on your own to find opportunities.
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Repaying Federal And Private Student Loans
- Federal student loans: Following a six-month grace period, you generally begin to make payments.
- Private student loans: Youll generally have a six-month grace period. If you elected to make in-school fixed or interest payments with our , youll continue to make those payments during your grace period. After that, youll begin to make principal and interest payments.
How To Find A State Grant
Many states offer college grant programs for state residents. This tool on the Department of Educations website can help you find the agency that distributes each states grants. To be eligible for grants, most states require that you fill out the FAFSA. Some including Pennsylvania, New Jersey and New York have a separate grant application in addition to the FAFSA.
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Look For Mistakes And Correct Them
Review FAFSA and CSS Profile. You may have made a mistake on either the Free Application for Federal Student Aid, known as the FAFSA, or the College Boards CSS profile. Both are used by colleges to determine how much you and your family can contribute to college costs.
Consult a counselor. Ask a college counselor to look over your forms to make sure you didnt misinterpret any questions.
Make corrections. You can make corrections to the FAFSA online, but be sure to contact your schools financial aid office to confirm updates to both the FAFSA and the CSS Profile.
But Less Is Always Better
Remember, with these rules of thumb, we are talking about the maximum youd want to borrow for your given degree. But youll have more financial freedom if you borrow lessor nothing at allto get your degree.
Less money in outstanding student loans means lower monthly payments. And that means you can afford to do things like take a lower paying job thats more rewarding, start your family sooner, or buy a home more quickly. So always be sure youre tapping out your non-loan resources, including savings, scholarships, grants, and more, before you take out student loans.
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Are Emergency Student Loans A Good Idea
While emergency student loans can be helpful, theyre not for everyone.
Before you apply for aid, youll want to think about the following factors:
- Are you eligible? Not all schools offer emergency aid, and if they do, there could be eligibility requirements. In addition, emergency loans may not offer enough money to help you out.
- Will you be able to repay the loan? An emergency loan is still a loan, so carefully consider whether you really need debt. If you cant pay it back on time, it can jeopardize your education you may be subject to late fees, plus risk being denied registration for classes. In other words, make sure you have a plan to repay if you take out a loan.
- Can you afford the costs involved? The good news is that some emergency student loans dont charge interest, unlike other types of personal and student loans. However, you could pay a service or loan origination fee, so check before proceeding to see whether its something you can really afford.
Find Free Money For College With Federal Grants
What is a grant? A federal grant is a form of federal financial assistance where the U.S government redistributes its resources to eligible recipients who demonstrate financial need.
Below, weve got you covered for Federal grants, State Grants, College Grants, and other grants in special situations. Just follow these steps, and youll have a higher chance of uncovering grants that are the perfect fit for you.
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How Much Home Equity Do You Have
If you have less than 20% equity in your home, Holeman suggests paying off your mortgage with a cash windfall. Many homeowners pay private mortgage insurance, or PMI, which some lenders require if your down payment is less than 20%.
PMI is usually 0.5% to 1% of your total loan amount thats added to your monthly mortgage bill. Federal law requires that your PMI be automatically terminated once the mortgage balance reaches the point where you have 22% equity in your home. You can also request its removal once you reach 20% equity.
If you have less than 20% equity in your home, paying down your mortgage faster is more beneficial because youre also getting closer to no longer having to pay that PMI each month, Holeman says.
How To Accept Your Federal Or Private Student Loan
You accept your federal student loans by signing and returning your . You may be asked to take part in entrance counseling at your school to make sure that you understand your loan obligations. Plus, youll sign a Master Promissory Note to agree to the loans terms.
You accept your private student loans after youve been approved. Heres our process:
Both federal and private student loans are legal agreements. When you agree to a loan and sign or e-sign for it, youre committed to paying it back, along with interest.
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Can I Get In Trouble For Misusing Student Loan Funds
Your student loans are supposed to be used for educational expenditures and essential living expenses. If your student loan lender finds out youre misusing funds, such as by paying for spring break trips or bar-hopping, its possible your loan could be terminated and you could be forced to pay back the full amount borrowed.
However, its very unlikely lenders will look into what youre using the funds for or take any action if they find out youre having some fun with your student aid money. Their main concern is your ability to repay the loan.
Why Seek Student Loans For Community College
You can save money when you choose to attend community college instead of or before a conventional four-year college. The average tuition costs at community colleges are much lower than at universities with four-year programs. This is another reason why many young students are choosing community colleges. You can save a staggering amount of money.
Even with the savings you attain when you attend a community college, you may still need some type of financial aid to assist in helping you pay for your tuition.
Scholarships and grants will provide assistance for your schooling, but they may not cover all of your community college costs. Educational debt for community college offer you a way to fill in the gaps in your college funding.
Although you may have thought that loans were only available for four-year university students, you can actually get loans for a community college education, too.
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