EDUCATION
SPECIAL SECTION:
Student Aid (FAFSA), which can be
completed online, as the name suggests,
for free! Need-based loans are available
as a Federal Perkins Loan, awarded to
students with the highest need, or a
Federal Direct Subsidized Loan, provided
interest-free while in college.
If FAFSA determines that a student
is ineligible for a need-based loan, non-
need-based loan options are available as
a Federal Direct Unsubsidized Loan or
Federal Direct PLUS Loan. 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.
• 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 as you go. Extended
plans may be made in a fixed amount
or a graduated amount and ensure
payment in full within 25 years.
Income-based plans take 10-15 percent
of your discretionary income and are
recalculated each year. Once you are
married, your spouse’s income will also
be considered, if filing jointly on tax
returns. Any outstanding balance on the
loan will be forgiven after 20-25 years.
• Consolidate for ease – If you have
multiple federal loans, consolidating
them into one can make repayment
easier. But there may be fees or
other conditions associated with
consolidating, so be sure to do your
research.
• Is forgiveness an option? Some
programs offer loan forgiveness if
you meet certain criteria or work in a
particular field. People in government,
nonprofit, and other public service
jobs may have the remainder of
their loans forgiven after 10 years
of service. Additional forgiveness
options are available for nurses,
teachers, AmeriCorps and Peace Corps
volunteers, and some state and private
programs.
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WEST COUNTY
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FALL 2019
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