Well, I've calmed down a bit now that sticker shock as abated somewhat. One reason why I was so incensed when I looked at my aid package was because it was nothing like the financial aid packages that I received for college. Those were sweet -- full scholarships, or at least, major amounts of tuition covered with grants. I guess expecting something like that was too much.
So, here's to loans then, the kind of money that one gets if there are no scholarships, fellowships, grants, gifts, or work-study to be gotten.
Federal Sponsored Loans:
These loans are sponsored by the federal government and is popularly disbursed by Sallie Mae. To apply for these loans, a student needs to fill out the FAFSA by the state's priority deadline, which varies from Feb 15 to Jun 1. The FAFSA is FREE. Let no one dissuade you from that. Once the FAFSA is submitted, the computer will spit out an expected family contribution (EFC), which is an estimate of how much a family can afford for college. Very generally, a school's cost of attendance minus the EFC is financial aid.
Perkin Loans are the best deal, currently with a 5% fixed rate. There are no origination fees and the government pays the interest on the loan while you're in school. The amounts for Perkins are fixed for each school, however, so not every student can get one. Assuming your need qualifies you for a Perkins, whether you actually get one is up to the school.
Stafford Loans have two subdivisions -- subsidized and unsubsidized. These are the next best thing, currently with a 6.8% fixed rate. On subsidized loans, the federal government pays the interest while you're in school. On unsubsidized loans, interest accrues and gets tacked on at the end of school (i.e. simple interest, not compound interest). In addition, depending on the lender, one could get charged up to 4% in fees for getting these loans. Staffords have maximum annual and lifetime monetary limits, depending on which year in school the student is in.
PLUS Loans are for parents and graduate/professional students. Currently fixed at 8.5%, these loans will cover education costs up to the school's anticipated cost of attendance. In other words, you can use this loan to borrow as much as you need to go to school. Origination and guarantor fees of up to 4% may apply, depending on the lender, so shop around.
Private Loans:
Loans may be available from banks, private persons, random organizations, or the schools themselves. Terms and conditions vary considerably. Some loan programs are great; schools often have subsidized loans with very low interest rates, and private funds may even have 0% interest rates or will forgive loans after certain terms are met. On the other hand, private student loans from banks and other commercial sources can cost an arm and a leg -- I've seen loans going with 15% adjustable interest rates and the interest may not even be tax-deductible. In these cases, they're as bad as credit cards. Borrower beware.
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4 comments:
I faced the same situation when I went to B-School. There is very little in the way of 'true' financial aid. It comes down to loans, loans and more loans. The problem is I managed my finances so poorly in the years leading up to and during B-School, and I now find myself in a mountain of debt, including credit card debt. You can check out my blog if you are curious how bad things have gotten :)
oh well, you'll be a doctor someday, and then you can afford to pay back the loans.
last month it happened with my friend . She was short of cash due to some urgent money needs and she took a payday loan but still after her payday she managed to return back. this emergency cash helped her for short time.
Don't get a payday loan to make ends meet. I don't know where sam2k is coming from, but if you need to fund your education, getting a payday loan is probably NOT the answer.
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