What is Financial Aid?
Financial aid is essentially money used to pay for College. Financial Aid is defined as funding provided to students and families to help pay for postsecondary education and educationally related expenses. It is NOT money used for wants, shopping sprees, buying a car, partying, spring break trips, etc. Keys to understanding how to finance your education are realizing the cost of attendance, understanding loans, understanding your financial aid package, knowing how much you owe, and developing a plan to repay student loans.
Understanding Student Loans
In some ways, of course, all loans are alike. You borrow money, called the principal, and agree to pay it back over a specific term, or length of time, with interest. But the conditions of the loan, some of which are listed below, can affect how much you can borrow and how much the loan will cost you.
- The term of the loan
- Type of the loan: Whether the loan is secured or unsecured
- Interest Rates: Whether the interest is fixed or adjustable
Types of Student Loans
The most common loan types are:
- Subsidized Direct Loan - no interest due during the in-school or grace period
- Unsubsidized Direct Loan – interest begins to accrue at the time of disbursement and will continue throughout the life of the loan
- Perkins Loan – no interest due during the in-school or grace period. Some loan forgiveness options
- Parent PLUS Loan – available to parents of dependent students
- Graduate PLUS Loan - available to graduate and professional students
- Private or Alternative Student Loans - available to credit worthy students
Student loans are a good investment in your future. It’s a good idea to keep your borrowing to a minimum. Borrow only what you need to cover necessary expenses, not extras. To lower your monthly payments, pay interest while in school or in your grace period. Unpaid interest is added to your loan balance (capitalized) when you enter repayment.
Do you know how much Student Loan Debt you have? The best place to find your complete loan history of federal loans borrowed is at the National Student Loan Data System (NSLDS) website. In addition to loan history, contact information is provided for the servicer that holds your loan. To access NSLDS click here.