Potential Magazine College and Career Organizer 2020 | Page 44

pay the way Sponsored by: loan comparison DO YOUR RESEARCH! If you’re like most full-time students, you may need to consider a student loan to help pay for college. But should you take out a Federal Student Loan, or should you consider a private lender? Here are the points to consider before you decide: VS Federal Student Loans Private Student Loans Payments Payments do not begin until six months after you graduate, leave school, or change enrollment from full time to part-time. May require payments while you are still in school. Limit Most private student loans have undergrad loan limits of $75,000 to $120,000. Federal Student Loans have a limit of up to $12,500 a year. Summers Only pays for 8 semesters. If you don’t max out your 8 semesters, you can use your loan towards summer courses. Will pay for summers. The loan limit usually has an annual amount equal to the cost of attendance minus other financial aid. Interest Interest rate is fixed, often times lower than private loans and even lower than most credit cards. Variable interest rates, some greater than 18%. A variable rate may substantially increase the total amount you repay. Subsidized Most undergraduates qualify for a subsidized loan, where the gov- ernment will pay the interest if you are enrolled at least half-time. Private student loans are not subsidized. No one but you pays the interest on your loan. Credit Credit check not required for Stafford or Perkins Federal Student Loans. May require an established credit record. The cost of your private loan will depend on your credit score and other factors. Cosigner May need a cosigner. The interest rate is significantly higher without a cosigner. No cosigner needed. Deductible Interest may be tax deductible. Interest may not be tax deductible. Postpone If you are having trouble repaying your loans, you may be able to temporarily postpone or lower your payments. Private student loans may not offer a repayment plan based on income. Monthly Payments Repayment plans, including an option to make payments based off your monthly income, are available. Check with lender about repayment options first. Fees No prepayment penalty fee. May have prepayment penalty fees. Forgiveness If you work in public service, you might be able to have a portion of your loans forgiven. It is unlikely that your lender will offer a loan forgiveness pro- gram. Bankruptcy Difficult or impossible to discharge with bankruptcy. 44 | College Organizer 2020 May be possible to have debt discharged with bankruptcy. www.potentialmagazine.com