Unsubsidized loans allow the borrower to add interest to
the total amount borrowed after graduation, but beware, as
this leads to owing even more money when it comes time
to start paying off the loan. Direct PLUS Loans provide
graduate students or parents the opportunity to borrow
the total cost of attending college, minus other financial aid
received.
Unlike the loans mentioned above that are sponsored
by the federal government, state and private loans are
sponsored by banks, colleges, foundations, and state
agencies. The U.S. Department of Education manages all
college loans available by state and requires students to
be in-state residents or enrolled in a college in that state.
Private loans are an option for borrowers but come with
terms and conditions that may not be as favorable as
federal loans. Private loans also require a cosigner who is
responsible for repaying the money if the student fails to
do so.
MANAGING DEBT POST-COLLEGE
Student loan debt continues to increase and has become
a burden on both graduates and the U.S. economy. There
are a variety of loan repayment options for students. Here
are some tips on how to approach repayment.
• Figure out what you’ll owe and start to save early –
Creating a budget early will allow you to build a solid
foundation for repayment after graduation. Setting aside
money each month toward future savings for repayment
will set you up for success come graduation day.
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• Understand your repayment options – There are several
different options available to start paying off student
loans based on the type of loan you received. Common
federal loan plans include standard, graduated, extended,
or income-based. Standard plans are payments in fixed
amounts that ensure loans are paid off in 10-30 years
(these payments are often very high for new graduates).
Graduated plans are payments that start out lower and
increase every two years, also ensuring loans are paid off
within 10-30 years (based on loan). This plan assumes
you’ll continue to make more money as you continue your
career path, so additional money is allotted to repayment