Student loans, the dreaded words that no one likes to hear. You want to run from them, but you cannot.
Student loans will most likely be a huge part in any student’s life. Yes, they can be scary, but what else? What are student loans, and how can you understand them better? Luckily, student loans are not hard to understand. They may even be easier to understand than your statistics class.
Here are some questions about student loans that students often have.
1. What type of loans are there?
Many student loans will come in the form of Perkins or Stafford loans. A Perkins loan is the most wanted loan simply because of the fixed interested rate of 5%, and it does not increase over the years, although it does have higher eligibility requirements. A Perkins loan is also subsidized, which means that the government will pay your interest while you are in school and for a small time after school. Both are for those students who have a financial need, but a Stafford loan can be taken out by any student.
2. How does interest work?
Just like with most loans, you pay interest on top of what you pay back. The larger the loan is, the more interest you pay. The interest rates range from 6.8% for a Stafford loan to 5% for a Perkins loan.
3. What makes these loans different from the normal loans?
A normal loan will begin to acquire interest right away, while the subsidized loans will have the interest covered by the government. Many loans also require you to have credit history, while student loans do not. For some, having debt can be seen as something against your character, although few see a student loan as a negative financial move.
4. When do I need to have them paid off?
There is a grace period of 6 months after you graduate before you have to begin paying on your loans. Unless you have special circumstances, like re-enrolling in school, or joining the military, you will have that 6-month grace period. You should contact your loan provider if you feel as if you may not be able to make your loan payments, and they may extend your grace period in some cases.
5. Will my scholarships affect my loans?
It may. If your financial aid, outside scholarships, and your student loans and grants exceed your need, the government will require the school to reduce your financial aid.
6. What is the difference between a grant and a loan?
Loans will be money that you have to pay back, and a grant is money that you will not have to pay back. Grants also do not have interest on them and can be thought of as a scholarship.
7. What would make me eligible?
Your financial need is normally determined by the FAFSA. It takes several factors to determine your financial need, such as children, income, savings, and other stuff. Universities use this to figure out how much financial aid you should get. There is no clear way to determine your financial need without filling out the FAFSA or something like it.
8. How does the work-study job work?
A work-study job is a campus job that is paid for by the university. It is given as a form of financial aid. The university will keep a certain amount of money and will pay you out of it as a way to help cut down your expenses. A work-study job will often happen when a high-quality student applies too late for scholarships, but still has some financial needs.
9. What if I do not graduate?
If you drop out of college, the amount you will owe may change. If you drop out early, you could have your federal aid retracted and be left owing more than you expected. You will still be expected to pay off your student loans. You should consider going to school part-time in order to extend your repayment period. As long as you are enrolled in college, your loans will be kept, and you will not have to pay them back until you are out of school.
10. Who should I talk to about loans?
Google has plenty of answers, although if you seem to have a special situation, it would be best to speak to a person. The university will have a Financial Office, and they will be the people that know all about loans better than anyone. No question will be a stupid one, and they may have already heard the question before.
College can sometimes be complicated, but getting loans for it does not have to be. Learning more about your student loans can help them be more manageable and less creepy. You should do your research and know what you will be getting yourself into before the bank statements begin. You will thank yourself later for it.