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In Massachusetts, students have access to four types of loans to help pay for their education. These include federal student loans, state-backed loan programs managed by MassBudget, private loans offered by banks and credit unions, and scholarships funded by the Commonwealth.
The state-funded student loan program, known as MassBudget, offers three different options for borrowers. Borrowers may take out a subsidized loan, which covers some or all of the interest payments while they attend school; a standard loan, which does not offer discounted interest rates for repayment; or a graduate PLUS loan, which provides additional funds for borrowing that exceedsexceeds $23,000 per year. Students may choose between these three options basedon their on their personal financial situation, affordability, and long-term goals. All loans issued by MassBudget carry fixed interest rates at variable rates throughout the duration of the loan term. Interest accrues monthly until it is fully paid off.
Federal student loans are provided by the U.S. Department of Education, including Direct Loans and Perkins Loans. These loans provide low-interest capital to eligible students who wish to pursue higher education beyond high school. Loan amounts range from $0 to $35,500. Repayment begins six months after the borrower graduates or withdraws from school, whichever comes first.If the loan is not repaid on time, a 10% tax penalty is imposed. If the loan is not repaid on time, a 10% tax penalty is imposed.
Private loans are often offered by banks and credit union lenders to students looking to finance their college expenses. Like federally backed student loans, private loans are subject to fixed interest rates throughout the entire term of the loan. Private lending institutions make money from the interest charged on loans. Unlike government-issued loans, private loans do not require borrowers to commit to any specific repayment plan.
Scholarships can cover tuition costs even when funding from other sources is insufficient. Scholarships awarded by schools and organizations outside of the student’s control can vary greatly in amount and eligibility requirements. Many universities award merit-based scholarships that are tied directly to academic performance and extracurricular activities. Individual donors, corporations, and foundations fund a significant portion of scholarship awards.
State of Massachusetts Student LoansState of Massachusetts Student Loans
The Massachusetts student loan program provides loans that cover tuition, fees, books, supplies, and travel expenses. These loans may be renewable throughout their entire course of study, giving students the opportunity to pay back their debt over time. Students who qualify for financial aid have priority in receiving these loans.
If you wish to receive funding under MassachusettsMassachusetts’s state student loan program, you first need to complete the Free Application for Federal Student Aid (FAFSA). You then must fill out the application and mail it to the Department of Higher Education. Students who cannot afford to attend school should apply for free loans.
There are two types of loans offered under this program; subsidized and unsubsidized. Subsidized loans are given if a student does not have enough money to meethis or her his or her costs without the help of government subsidies. Unsubsidized loans are paid off directly by the borrower. Both types of loans allow you to borrow a certain amount per year and are based upon your expected family contribution, which is calculated using the income of both parents.
In order to receive a subsidy, a student must show proof of financial need. All students are eligible for certain grants, but the FAFSA helps determine whether they are eligible for any federal programs.
Depending on what level of assistance you are seeking, you may be able to get a higher subsidy than someone who qualifies only for a lower level of support. For example, if you’re interested in the most generous financial aid package, you may beable to able to qualify for the maximum Pell Grant, regardless of how much money your parents make. However, if you want a smaller loan, you may only be eligible for a partial Pell Grant. Most people choose to take the minimum grant since it gives them the most leeway while eliminating some of the paperwork.
A federal student loan is granted for four years after graduation. After the fourth year, the loan is considered “in-school”. Once you graduate, you must begin repaying the loan immediately. Failure to repay the loan completely could result in high interest rates and late charges. Interest begins accruing six months after you go to college.
Repayments start six months after the date of graduation, unless you defer your repayment for at least five years. Your monthly payment will depend on your current annual salary and the type of loan you havehave taken out. The payment amount is determined each year based on the number of credit hours you have takenhave taken.
Your payments will increase slightly once your salary reaches $15,000. The rate doubles for anyone making between $30,000 and 30,000 and $40,000. After reaching $80,000, your payments become unaffordable for many borrowers.
A hardship discharge can be obtained forA hardship discharge can be obtained for those who are unable to work due to illness or disability. To do this, you must file aa FAFSA, which will determine your eligibility for this option. Hardship discharges last up to seven years.
If you are still working towards earning your degree after being discharged, you may be allowed to continue to borrow for educational purposes.
State of Massachusetts Student LoansState of Massachusetts Student Loans
Massachusetts state student loans are issued by the Massachusetts Department of Revenue (DoR) and provided by private institutions. Students who elect to obtain private financing remain on the institution’s loan repayment plan and are responsible for any interest charged. If they do not repay the principal prior to the end of the semester, interest accumulates and may need to be paid immediately. All undergraduate students attending school in Massachusetts are eligible for these state student loans, except those enrolled in graduate programs located off-campus. In addition, international students attending schools located in Massachusetts are eligible for MassSTUDY grants.
Massachusetts General Law Chapter 66C provides student loans for eligible students attending public colleges or universities in Massachusetts. Loans may be used for tuition, fees, books, supplies, equipment, room and board, and other expenses related to educational purposes. Loan funds may not be used to pay interest or principal on a student loan that was subsidized under federal law prior to July 1, 1986, unless the state has waived its right to do so. A student may participate in the program regardless of residency. To apply, visit www.masshighered.gov/loans/state-student-loan-program/.
The TuitionThe Tuition Refund Program
The Tuition Refund Program provides grants for tuition reimbursement to qualifying undergraduate resident students who attend a Massachusetts college or university at least half time (50%) full time. Eligibility requirements vary based on whether the student attends a community college or a four-yearfour-year institution.To apply, go to www.masshighereducation.org/loans/tuition-refund-program/. To apply, go to www.masshighereducation.org/loans/tuition-refund-program/.
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