Whether graduating from high school and trying to decide if a student loan for college is the right course or graduating from college and trying to determine payment options for loans already incurred – this is a trying time for many.
As a parent with two recent college graduates, this is a topic right at the front of my thoughts. Also, as a Certified Credit Education Specialist for GreenPath Debt Solutions, I find this is one of the hottest topics for discussion in the question and answer portion of my classes.
Student loans can make it possible for some who would otherwise not have the chance to continue their education and follow their dreams to do so. However, these loans, just as any other, need to be considered with much care. They can end up being a heavy burden if not thought through properly.
Loans should only be considered after all other options have been exhausted. These other options include grants and scholarships. There are many opportunities for grants and scholarships that are not taken advantage of because students do not take the time to research and apply. To begin, a Free Application for Federal Student Aid (FAFSA) will be required.
On this site (http://www.fafsa.ed.gov/), you can also find information about grants, scholarships, loans and loan repayment options. Some suggestions are: do the research (check out the scholarship guides at the public libraries), check with colleges to which you are applying, ask employers (either the students or a parent’s), research local scholarships (churches, clubs, large companies – ask the school counselor for guidance) and search the Net (Google financial aid, student aid, scholarship on the internet). When taking out student loans, borrow only what is absolutely necessary each year for that year’s expenses. Never borrow more than is needed just because it is offered.
If you are on the repayment end of student loans, there is information on the FAFSA website for these options as well. The repayment plans include the Standard repayment (a fixed amount each month until loans are paid in full – up to 10 years for repayment), Extended repayment (a fixed annual or graduated amount over a period not to exceed 25 years), Graduated repayment (payments start low and increase every 2 years with a maximum length of 10 year repayment period).
There are also some special repayment plans which are based on income and sometimes on family size. These include Income Based Repayment (IBR) for Federal loans, Income Contingent Repayment (ICR) for Direct Loans and Income Sensitive Repayment for FFEL Loans. There is also a Public Service Loan Forgiveness Program that is an option for individuals who will be in full-time public service employment (beginning anytime after October 1, 2007). Remember to complete your schools Financial Aid exit interview to learn more about your options and visit the FAFSA website at www.fafsa.ed.gov.
Finally, GreenPath has recently put out a news release listing the top ten checklist recent college graduates need complete related to student loans, budgeting and finding that first job. Simply click the following link: College graduates need to make sure finances are in order.