Student Loans; What should I know?

[WyrmDL]

Hey TB,

I again, ask for your expertise in the field of life!

I'm starting college soon, and I've been looking at student loans. However, I have no experience or knowledge with this kind of stuff.

What are some general words of advice that you can spare for a new student? What are some things I should know, things I should look out for, and such?

Thanks in advance!

-Don

[fo shizzle]

They are literally the only type of debt that you can't include in a backruptcy. If you get behind on your payments the lender can and will garnish your wages.

You WILL pay your student loans back. If you don't the gov't allows the lender to jack you (digital-style).

[TrooperFarva]

I don't know how much of your tuition is being paid for with student loans, but if it's a substantial amount, my advice would be to go to a community college for 2 years, and then transfer to whatever school you want. You'll get pretty much the same education, exactly the same degree, and it'll cost a lot less.

[warnergt]

There is one web site that you must know if you're looking for student financial aid:
http://www.fastweb.com/

This free site has a lot of information for finding and getting financial aid.
Be careful out there. There are many sites that get you to pay money to get
the same information that you can find on this site.

Watch out for the working and saving disincentives. Last I knew, if you
worked before college, they expect half of that money to go to paying
for your education; it comes right off the top of your student aid.
In other words, when you thought you were earning $6 per hour, you
were really, in effect, earning $3 per hour.

Also, they expect 20% of your parents liquid assets to go toward your
college education. So, if your parents were wise enough to save $100,000
for your education, that knocks $20,000 off of your first year's student aid.

Like everything else that government gets its hands into, there are
penalties for those who work hard and save.

Go to that site. Learn everything you can. Get all the free money you can.

[CamMcIntyre]

Take out as little loan money as you can. I did 3 years at a private school while funding it primarily through student loans...I then transferred out & started all over because I was far enough behind to where it was going to go past my limit. I'm in a entirely different major at community college (will transfer to a state school) & will spend less on the whole 4 years this time around than I did on 1 year at private school. Why? Because I have enough debt from private school to last me a lifetime.

Take out as little loans as you can.

[Hawaii Islander]

Don,

Student loans are often necessary for many people to attend college today. Cost of attendance has increased substantially over the past two decades, while the amount of work study and Pell grants has NOT kept up with this increase. Use up as much Pell grants, work study and private grants as possible first. Use student loans judiciously (it adds up quick even for necessities).

Student loans are NOT necessarily free from Bankruptcy protection, but most are. There are a number of ways to help defer the loans if finances become tight. Some student loan amounts may even be forgiven after a certain amount of time and if certain conditions are met (i.e., public service in the form of AmeriCorps service, teaching in underserved regions, working in certain health service related jobs in high need areas, etc.)

There are other financial responsibilities that are NOT covered by Bankruptcy protection (Taxes, child support, etc.)

Read all the info you can regarding financial aid and student loans before applying. See the link below. Don't let fear of student loans keep you from going to school, just use the resource wisely.

http://www.salliemae.com/

Good luck with school!

Michael Dionne BA, MS, MPH

[m0nst3r]

Fill out a FAFSA and see if you qualify for any scholarships, grants, work study or a subsidized loan, which is a loan where the interest is paid by the government. Fastweb is a good site to look for scholarships, so I would definitely check that out.

Also, be weary of taking out private loans. As mentioned before you can't get rid of most student loans through bankrupcy, but even worse, the interest rates on a private loans can go as high as the lender wants them to be if you default on them. It would really suck if you borrowed $3000 and had a 35% interest rate tacked on that.

Also, when discussing interest rates, be sure you get the effective annual rate (EAR), and not the annual percentage rate (APR), so you know exactly how much you have to pay back . You may be quoted a 7% APR, but in reality you'll be paying 7.23% because they will charge you a portion of the interest a few times throughout the year, most likely every month (compounding). That .23% may not sound like much, but when you start getting into a large amounts of money it's night and day.

Definitely try to get as many scholarships, grants, and as much work study as you can before taking out loans. There's a lot of free money out there, you just have to know where to find it. You'd be surprised how many people get scholarships simply because they are the only ones who applied for them.

Edit: Oh yea, I forgot to add that if something doesn't feel right to you, it most likely isn't.

[lorenk]

Originally Posted by TrooperFarva

I don't know how much of your tuition is being paid for with student loans, but if it's a substantial amount, my advice would be to go to a community college for 2 years, and then transfer to whatever school you want. You'll get pretty much the same education, exactly the same degree, and it'll cost a lot less.

Or go to a state school.

I went to a private liberal arts college (Linfield College), and let me tell you, being middle class, white, male, and about average academically hosed me for scholarships. So I went with student loans. Which was cool. I loved my college experience. I just have a huge (like, I personally owe $50,000+ in student loans; my parents have paid back over $40,000 in student loans) student loan. But here are some things to think about:

-Having student loans will lower your credit, all those years you're in school, and that loan is in deferment - it counts against your credit. Mine was at 530 (thats about as bad as you can get) when I graduated. I'm getting it up, slowly.

-If you don't have a car, or plan on getting a car, don't wait until after you graduate; unless you have someone with good to great credit willing to co-sign. Once you're out of school, those loans will affect your ability to get car loans. Same goes for home loans.

-Federal loans are nice, they have lower interest rates and the interest can be deferred. The downside, they are more difficult to get.

-Private loans are huge. You can pretty much get whatever amount you want. Just remember however much you borrow will impact you once you get out, and the interest rate is not deferred. So you want to borrow the smallest amount possible. And the interest rates are not that great.

Oh, and a side note, I'd avoid Wells Fargo. They lost multiple payments from my parents, and insisted my parents didn't pay them. When they found them, Wells Fargo forgot to take them out of collections. All four times. Their attitude with my parents was very cavalier. Needless to say we paid off those loans as soon as we could.

Hope this helps! Also, check with your schools financial aid department, they should have more sources to point you to. Good luck!

[jojobean39]

I suggest the community college route for the first couple of years. Work while going to school. Pile up as much cash as possible. If you can get out of school without student loans, you are a step above the rest. Those things take forever to pay off. I was very fortunate enough to get scholarships to go to school. But I know guys here at my office have been paying for them for decades.

[Thunderscreech]

Originally Posted by jojobean39

I suggest the community college route for the first couple of years. Work while going to school. Pile up as much cash as possible. If you can get out of school without student loans, you are a step above the rest. Those things take forever to pay off. I was very fortunate enough to get scholarships to go to school. But I know guys here at my office have been paying for them for decades.

THIS THIS THIS THIS THIS.

Also, at community college, you done with the 13th grade classes and then when you get to real college you just do what you're good at.

Plus, this way, you wont be in debt for the rest of your life.

[spade2you]

Community college isn't a bad idea for a lot of the pud classes and general stuff. I graduated 4 years ago from Creighton and I'm disgusted with the tuition hikes that are happening every year, especially in the various grad/professional schools.

Anyway, take out the minimum and live a modest lifestyle. Get a job to pay for the extra stuff. Get a degree and job in something that can actually pay for the student loans! A $100k degree in underwater basket weaving might be fun, but probably won't pay the bills.

[PaulNYC]

Originally Posted by spade2you

Get a degree and job in something that can actually pay for the student loans!

+100

[Philbiker]

Originally Posted by TrooperFarva

I don't know how much of your tuition is being paid for with student loans, but if it's a substantial amount, my advice would be to go to a community college for 2 years, and then transfer to whatever school you want. You'll get pretty much the same education, exactly the same degree, and it'll cost a lot less.

+ one million infinities.

If you're paying yourself and are considering student loans, definitely get yourself to a Community College for the first two years. The cirriculum is the same, the teachers are fine, the atmosphere is not the "party" atmosphere which may distract you. Also, once you have the Associate's degree in hand you are guaranteed automatic admission to many colleges and universities.

Plus you get another degree to put on your wall/resume.

[Hawaii Islander]

OP,

Going to community college to start is not a bad idea, but be careful. The programs at the community colleges DO NOT always match up with your degree choices for undergraduate school at a four year institution.

Check with BOTH the community college and the college program that you are interested in to make sure you don't waste time, energy and money on courses that don't carry over.

For example, my nephew is starting community college in Hilo, HI to prepare for the computer science program at the University of Hawaii. Only one of the computer courses at the community college directly transfer to the University's computer science degree program (as an elective). Taking more than one semester's worth of computer courses at the community college would add an extra year to his Bachelors Degree program. He is transferring to the university in the spring semester.

[jojobean39]

^^^

That is great advice. I know for engineering, there were certain classes that wouldn't transfer. I know that a couple of kids who transfered from the community college did have some issues. But, for the most part, pre-requisites transfered just fine.

That is a great thing to point out and something that is certainly not immediately obvious.

[spade2you]

Keep in mind, if enrollment goes down too much due to community colleges, there's the potential that universities might try to get picky. I know Creighton would allow certain courses to transfer, but not without putting up a fight. Even if it's an expensive business, it's still a business.

[playinpearls]

RUN, RUN, RUN, RUN, RUN, RUN.....THEN....RUN.


I have 40k for an associates. i was stupid and didn't research about going to cheap schools that you can afford, community colleges, even state colleges. I went to De*ry university. they had a good name supposedly, and had the degree i wanted. so i went.
graduated last year. still no employment for where i want to be, working at the same pre-college pay in an industry that works with IT but doesn't provide any direct experience, so i'm stuck for now.
Didn't provide any vouchers for certifications.

School loan payments kicked in at 450 a month. 3 of which are now at 12%, the rest at around 6.5%. Now i can't afford certifications. Now i'm back in school (a cheap in state community college) and i am figuring out that i could have gone here and gotten a bachellor's, paid my own way with a state scholarship, and graduated for less than 10 grand. Choose a school you can afford, and stay out of debt! Its one hole you can't fill with dirt!!

[Philbiker]

Good point to make sure that the community college program matches up with the program you're looking into. Even if it doesn't the very worst case scenario would be that you have a few extra electives on your degree and have to re-take a few courses.

I ran into this situation also. My A.S. is in "Computer Science" and it had some fairly advanced math requirements. The Linear Algebra and Differential Equasions classes that I took at community college were covered as 300-level courses at the university, but since they transferred in from a Community College, my university could not accept them as 300 level courses. Even though the class cirriculum was exactly the same.

Thing is you'll probably change your mind on what you want to study anyway in the first couple years, so there's only so much of this planning you can do. You can get the core cirriculum stuff (English, History, Humanities, etc.) out of the way for cheap.

Community College cirriculums usually match up to State Colleges and Universities cleanly. Private colleges and universities - not so much.

Another option you may not like is to get your Associate's degree and join the workforce directly. I got my A.S. in Computer Science, did Co-Operative Education, then immediately entered the workforce. After a few (many) years I finished my Bachelor's degree, and my company paid for it. Lots of companies have educational reimbursements, and there are specific tax allowances for this so I didn't even pay tax on the reimbursements. I've never had a student loan and I'm very happy about that fact.

College loans absolutely suck. I have friends and family who have them. There are options.

[Hawaii Islander]

Originally Posted by playinpearls

RUN, RUN, RUN, RUN, RUN, RUN.....THEN....RUN.


I have 40k for an associates. i was stupid and didn't research about going to cheap schools that you can afford, community colleges, even state colleges. I went to De*ry university. they had a good name supposedly, and had the degree i wanted. so i went.
graduated last year. still no employment for where i want to be, working at the same pre-college pay in an industry that works with IT but doesn't provide any direct experience, so i'm stuck for now.
Didn't provide any vouchers for certifications.

School loan payments kicked in at 450 a month. 3 of which are now at 12%, the rest at around 6.5%. Now i can't afford certifications. Now i'm back in school (a cheap in state community college) and i am figuring out that i could have gone here and gotten a bachellor's, paid my own way with a state scholarship, and graduated for less than 10 grand. Choose a school you can afford, and stay out of debt! Its one hole you can't fill with dirt!!

The economy is what's hurting your job opportunities at the moment. Hopefully that will change soon.

Loan consolidation is an option you might look into once you get out of school. Also, student loans may be deferred if you continue your education. Enrollment in certification courses sometimes may count for deferment. It's worth checking into.

Forbearance is another option (when you are out of school and working). This defers student loan payments for up to three years (renewed annually) and is based on your income versus student loan payments. If the student loan payments are greater than a certain percentage of your income and living expenses, then you qualify. Again, it may be worth checking with your lenders (all of them).

Your advice on researching schools and degree programs for cost and career development before choosing schools makes sense.

[Stumbo]

All of the top rated colleges (Harvard, Stanford, etc.) do a "blind" acceptance. If you get in, they will find money so you can afford the school.

Many people don't apply to the top colleges because they believe they can't afford it. My daughter graduated from Stanford so I know of which I speak.

Also, some community colleges have "guaranteed" course setup for students looking to transfer.

When you consolidate loans into one payment after you finish school, you can chose the length of time you want to pay them off (up to 30 years). You can always pay them off early if you're making good money.

There's also work-study and other financial aid options that may be available directly from your school. Now's the time to find out as much information from the school as you can.

Good luck.