THE PRICE OF COLLEGE: STUDENT LOANS
They’re loans, not free money By
BECKY GILLETTE
COLLEGE EDUCATION is an investment in one’s own future, which is possibly the most important investment a person will ever make. But before getting a loan, exhaust all possibilities to finance college. Apply for all financial aids and scholarships that are available. Keep living expenses low. Work part-time to help cover costs. Borrow only what you need instead of being among those 10 percent of
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4 MAIN SOURCES OF FINANCIAL AID » Federal government » State government » Colleges. » Private scholarship providers, such as foundations, organizations and employers. “You should start the search for private scholarships as early as possible,” Rogers said. “There are millions of dollars in aid available, but you must actively seek out the dollars and apply. Websites like Fastweb.com and FinAid.org have powerful scholarship search engines. Keep in mind that application deadlines for private scholarship dollars may be earlier than college admission deadlines.” Typically, you will apply for institutional financial aid as part of the college admissions process; however, some colleges have separate scholarship applications. The scholarship application deadline may also be earlier than the college admission deadline.
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student loan borrowers who end up with $40,000 or more in debt. Realize that student loans must be repaid. “Sometimes it is necessary and acceptable to finance an investment, but as with any investment such as that of a car or home, putting money down will reduce the overall cost,” said Jennifer Rogers, director of Student Financial Aid, Mississippi Institutions of Higher Learning. “When financing a college education, grants, scholarships, and income from work act as money down, thereby reducing the amount of tuition and other expenses that must
FAFSA FIRST
WHAT TO LOOK FOR IN LOANS
After applying to college, you should first complete the FAFSA (Free Application for Federal Student Aid), available online at www.fafsa.gov. You should then complete the state application, which is available online at www.mississippi.edu/financialaid between January 1 and September 15 every year. Mississippi students who complete the FAFSA first, can link directly to the state application via a link on the FAFSA completion page and the demographic data will transfer into the state application automatically. Completing the FAFSA will determine whether you are eligible for a federal subsidized loan, which does not accrue interest while you are still in school. However, Rogers said even federal unsubsidized loans, which do accrue interest while the student is in school, often have repayment terms that are better than some private loans.
» What are the interest rates? » Is their loan subsidized? If so, you don’t have to pay interest while in college. » What does it cost to take out the loan (the origination rate)? » Does the loan include favorable repayment options like income-based repayment and deferments for economic hardship or additional education?
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be financed with interest. You should always seek grants and scholarships that do not have to be repaid before seeking loans.” Loans are often packaged along with scholarships and grants in an amount equal to the college’s entire cost of attendance. Cost of attendance includes tuition, room and board, books, and living expenses. If you do not need all of the loan money offered in order to be successful in college, you should reduce the amount you borrow. You have the right to determine what you borrow. BEWARE OF DEBT While getting through college with little or no student loan debt is a lofty ambition, the reality is that an estimated 60 percent of the 20 million college students in the U.S. borrow money to help cover the costs of getting a college degree. That has added up to a staggering $1 trillion in outstanding student loan debt in the U.S. today. In may seem like a no brainer, but if you don’t want to join the ranks of people who may be paying off students loans until the time their kids head off to college, borrow the least amount possible. Currently nearly 42 percent of people repaying their student loan are between the ages of 30 and 50. It is a good idea to consider the amount of potential salary from the field of study you are pursuing when deciding how much in total student loans to take out. “A wise investor will always consider the potential return on his or her investment,” said Jennifer Rogers, director of Student Financial Aid, Mississippi Institutions of Higher Learning. “You should consider whether your field of study will lead to employment with a livable income. No one wants to postpone life’s major milestones, like getting married, buying a home, and starting a family, because they can’t afford to do those things and repay their student loans.”
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