July 29, 2014

Paying Your Way

Financing the Future

While scholarships and grants are ideal, you may still need to take loans to pay for the rest.

Ginger Broslat | 11/8/2013

Federal Loans
Subsidized, Unsubsidized, PLUS and Perkins. What's the difference? After filling out the FAFSA, you will receive a Student Aid Report (SAR) telling you what loans have been approved for you. These are the four types:

1. Stafford Direct Subsidized: Based on financial need. You do not have to pay these off until you graduate; the government pays your interest while you are in school.

2. Stafford Direct Unsubsidized: For eligible undergraduate, graduate and professional students; not based on financial need. The student normally pays interest only on these loans while attending college.

3. Direct PLUS Loans: For parents of dependent undergraduate students, and for students in graduate or professional programs, regardless of financial need. Payments can be made while the student is in school or defer payments until graduation.

4. Federal Perkins Loan: The school is the lender; based on exceptional financial need.

Private Loans
Many banks offer educational loan options. Make sure loan offers you may receive online or in the mail are from a reputable financial institution or loan company. You'll have to make payments while you are in school, so consider private loans as a last resort.

With any type of loan — federal or private — the amount you pay off will be much more than the amount you were loaned, so spend it wisely and only use it for your college costs.

Loan Forgiveness
There are certain occupations that allow you to have your federal student loans forgiven (sometimes partial), discharged or canceled.

Teacher Forgiveness Loan: If you are a teacher and a new borrower and have been teaching fulltime in an elementary, middle or high school that is in a low-income area for at least five consecutive years, you might be able to have $5,000 to $17,500 of your subsidized or unsubsidized loans forgiven (PLUS loans are not included).

Public Service Loan Forgiveness: If you have made 120 payments (normally 10 years) on your Direct Loans after Oct. 1, 2007, and are employed in certain public service jobs, the remaining balance may be forgiven. Occupations that qualify include: nursing, teaching, law enforcement and several others.

If you think you qualify, contact your loan servicer, or if it is a Federal Perkins Loan, contact your school if they made the loan.

To estimate the amount of debt you'll have upon completing college (and see what your income will need to be in order to comfortably repay that debt) check out a loan calculator like this one: www.finaid.org/calculators

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