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Understanding Loans Before You Borrow

Posted by Manuel Fabriquer on Fri, Apr 17, 2015 @ 3:39 PM

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While a college education can be expensive, it is an invaluable resource, helping you excel in your chosen career field and contributing to your all-around personal development. Fortunately, students these days have options for financing their higher education plans. Alongside scholarships, grants, and family contributions, students can choose to take out federal and private loans to help pay for their educational costs. Taking out a loan is a serious consideration, and it is important that you fully understand the facts and obligations associated with loans before borrowing.

Borrowing from the Government

If you plan to take out loans for your college education, federal loans are the way to go. Your university will determine your possible loans in line with information gathered from your FAFSA. With a fixed interest rate on federal loans, you’ll better know how much interest you’ll be paying over the life of the loan. Conversely, private loans have variable interest rates, which can present a financial challenge should the rates rise. As well, federal loans offer repayment options and programs for those who are experiencing financial hardship.

The most common type of federal loan is the Stafford Loan. These loans have yearly and overall borrowing limits, which differ based on what year you are in college, and whether or not you are financially dependent on your parents. Stafford Loans are divided into two types: subsidized and unsubsidized. Subsidized loans, contingent on financial need, do not accrue interest while you are still enrolled in school part-time or greater. Unsubsidized loans do accumulate interest, beginning when the loan is distributed. Unsubsidized loans also have a higher interest rate.

Other federal loans include Perkins Loans and PLUS Loans. Perkins Loans, with an interest rate of 5%, can assist students with up to $5,500 each year. If you’re a dependent student, your parents may qualify to take out a PLUS Loan. This loan is repaid by your parents and also has a fixed interest rate, making it a better alternative to a private loan. While you are enrolled in school, your parents do not need to make payments. A PLUS loan amount cannot exceed the total cost of educational expenses minus a student’s existing financial aid.

Things to Know

While private loans are an option, their variable interest rates and lack of structured repayment should make them your last resort. No matter the loan, it’s important to know that loans taken out in a student’s name are the responsibility of the student. Once you’ve graduated, you will be responsible for repaying your accumulated educational debt.

Fortunately, most federal loans have a grace period. Immediately following graduation, this grace period typically lasts 6 months. During this time, you won’t need to begin making repayments, but on unsubsidized Stafford loans, interest will still accrue. Many students take advantage of this grace period to commit to the job search in earnest. If you don’t find suitable employment or are experiencing financial hardship, there are options for repayment that can take into account your current income. This can temporarily lower your payments so that you can still continue to make them on time. In some circumstances, there are also options for forbearance and deferment, subject to the discretion of your loan servicer. Depending on your career interests, it may be worth investigating loan forgiveness programs, which can result in some reduction in your overall loan amounts.

 For further information on student loans, check out the following resources:

 https://studentloans.gov/myDirectLoan/index.action

 https://studentaid.ed.gov/types/loans

Tags: strategies for college, college planning abc, college planning, college applications, cost of attending college, money for college, Manuel Fabriquer, attending college, Paying for college, cost of college, student loans

When It’s Time to Make a Decision: Your Final College Choice

Posted by Manuel Fabriquer on Mon, Apr 6, 2015 @ 11:03 PM


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Congratulations! You’ve been accepted to several different colleges and universities, and now it all comes down to choosing one. Where will you attend? Selecting your future alma mater can feel like one of the biggest decisions of your life. While choosing a college is a major decision, it isn’t one that should cause undue stress and worry. Here are a few considerations to help you narrow it down and pick your school, feeling happy and peaceful in the process. 

Money

When it comes down to it, choosing the school that gives you the best deal financially may end up being the best option. There are always trade-offs for every factor, but if you have two schools which are comparable in size, offerings, and reputation, it may be best to stick with the one that will leave you with the smallest bill. 

Location

Location can play a large part in helping you make your final college choice. Consider what a location can offer you. Were you initially seeking a large school in an urban setting? If you aren’t accepted to a big-city school, you may want to go with one set in a medium-sized city, as opposed to selecting a small town college where your options may feel more limited.

Program Offerings

Location is a less important factor to some students, who are seeking institutions with certain majors or programs. If this is you, you will want to carefully weigh your options between schools. Look closely at the courses you’ll be able to take, but also take note of the internship possibilities, future industry connections, and potential for related extracurricular activities. Remember your experience at a “big name” school may be less personalized than a smaller school with a great program. If you’re looking for more one-on-one attention and opportunities to be “a big fish in a small pond” the latter option may be ideal for you.

Take Your Place 

When making your final college choice, don’t simply consider the schools, consider yourself. Pretend you’re a friend: which school might you recommend for yourself? You can also ask for the wise opinions of others such as your parents or guidance counselor, but ultimately, the college decision is yours to make. Looking at a college, think about how you will fit into the environment? Is this a place you’ll feel comfortable? Do you think this is a place where you can grow? What will you contribute to the school’s community? Pondering such questions can help you look at the bigger picture.

Make the Journey Your Own

Ultimately, your college experience is what you make of it. This may be a cliche statement, but nonetheless, it is true. Knowing this, however, can make the decision process so much easier. Wherever you choose to attend, the important element in the experience is not the college, it is YOU. So take a breath, take the pressure off, and go ahead and send in that deposit. Your adventure awaits!

Tags: strategies for college, college planning abc, college planning, college applications, Manuel Fabriquer, College Admissions, attending college