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How will I pay for college?
What are the different paths I can take to pay it off? How do student loans work?
#college #finance
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Kristy-Lyn’s Answer
Student loans can be complicated. Your current financial situation, your parent's financial situation, the state you
live in, and the colleges you apply to can all have an impact in the type of student aid you can get. And there are different kinds of loans: federal loans and private loans.
Let’s start with the basics.
Federal Loans:
Federal loans are limited in value and qualifying for these loans usually depends on the results of your Free Application for Federal Student Aid (FAFSA). If you qualify for Federal loans, there are two different kinds - subsidized and unsubsidized. A subsidized loan means that the government lends you an amount of money over the course of your college career without charging interest until you graduate (in other words, the lender pays the interest until you’re finished with school). An unsubsidized loan means that your loan begins to earn interest immediately which is compounded (aka added over and over) and can grow to a significant amount! If you take out unsubsidized loans, you have the option to pay the interest while you’re in school to help keep the extra interest from being added to your principal (or original) amount.
Private Loans:
Private loans are offered by individual student loan lenders (like a bank). Because these loans are owned by private businesses instead of the government, the interest rates can be much higher and the terms of the loans can vary. If you opt to take out private student loans, keep in mind that high interest rates can make it harder to pay them off because the interest continues to grow over time.
Repayment:
The standard for repaying loans varies by lender so you would have to check the terms of the loan to know for sure. Generally the standard repayment is made of 120 payments (or 10 years). Most loan borrowers pay their loans off over this period of time. The payments are fixed and do not change from month to month. There are other repayment plans though, including: graduated repayment (10 or more years where payments increase over time), extended repayment plans (if you owe more than $30K in loans, you can spread out the payments over 25 years), or income driven repayment (your payment amount is dependent on your income level). For more information on repayment of loans you can visit the Consumer Financial Protection Bureau (CFPB) website here: https://www.consumerfinance.gov/ask-cfpb/how-long-does-it-take-to-pay-off-a-student-loan-en-621/
Depending on where in the college process you are – there are steps you can take to help you figure out what loans are available to you and how you can fund your education. See "next steps"!
live in, and the colleges you apply to can all have an impact in the type of student aid you can get. And there are different kinds of loans: federal loans and private loans.
Let’s start with the basics.
Federal Loans:
Federal loans are limited in value and qualifying for these loans usually depends on the results of your Free Application for Federal Student Aid (FAFSA). If you qualify for Federal loans, there are two different kinds - subsidized and unsubsidized. A subsidized loan means that the government lends you an amount of money over the course of your college career without charging interest until you graduate (in other words, the lender pays the interest until you’re finished with school). An unsubsidized loan means that your loan begins to earn interest immediately which is compounded (aka added over and over) and can grow to a significant amount! If you take out unsubsidized loans, you have the option to pay the interest while you’re in school to help keep the extra interest from being added to your principal (or original) amount.
Private Loans:
Private loans are offered by individual student loan lenders (like a bank). Because these loans are owned by private businesses instead of the government, the interest rates can be much higher and the terms of the loans can vary. If you opt to take out private student loans, keep in mind that high interest rates can make it harder to pay them off because the interest continues to grow over time.
Repayment:
The standard for repaying loans varies by lender so you would have to check the terms of the loan to know for sure. Generally the standard repayment is made of 120 payments (or 10 years). Most loan borrowers pay their loans off over this period of time. The payments are fixed and do not change from month to month. There are other repayment plans though, including: graduated repayment (10 or more years where payments increase over time), extended repayment plans (if you owe more than $30K in loans, you can spread out the payments over 25 years), or income driven repayment (your payment amount is dependent on your income level). For more information on repayment of loans you can visit the Consumer Financial Protection Bureau (CFPB) website here: https://www.consumerfinance.gov/ask-cfpb/how-long-does-it-take-to-pay-off-a-student-loan-en-621/
Depending on where in the college process you are – there are steps you can take to help you figure out what loans are available to you and how you can fund your education. See "next steps"!
Updated
Margaret’s Answer
Look into scholarships provided by the school you are interested in as well as local organizations. Also, see what grants you may be able to apply for. Loans are incredibly helpful for covering the remaining costs or sometimes you can use them for the entire price of your education.
Updated
Derek’s Answer
Two items I would like to address with this question.:
1. Do you already know what you want to go to college for? If you do, and your career requires a degree, then pay cash for it or apply for scholarships. DO NOT take out loans, as they will stay with you for a long time.
2. If you do not know what you want to do, don't jump into college yet just because. I would hate for you to pay money to go to school and then not need the degree you received for the career you chose. Example of this, People will get a political science degree, pay $80,000 for it, and then get into sales, business management, etc. Something that their degree does nothing for them.
Know what you want to get into, then decide whether or not a degree will help get you there. There is nothing wrong with going to college in your late 20s. That just means you have worked for 8-10 years and learned a lot!
1. Do you already know what you want to go to college for? If you do, and your career requires a degree, then pay cash for it or apply for scholarships. DO NOT take out loans, as they will stay with you for a long time.
2. If you do not know what you want to do, don't jump into college yet just because. I would hate for you to pay money to go to school and then not need the degree you received for the career you chose. Example of this, People will get a political science degree, pay $80,000 for it, and then get into sales, business management, etc. Something that their degree does nothing for them.
Know what you want to get into, then decide whether or not a degree will help get you there. There is nothing wrong with going to college in your late 20s. That just means you have worked for 8-10 years and learned a lot!