5 min read
If you’re going to college, you should know what you are getting yourself into. In our video, we break down the good, bad, and ugly of student loans. So if you’re about to embark on a big loan, keep watching!
In this video we look at how much money students actually borrow before they earn their first degree.
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Student loans have been around since 1891, making them just as old as the United States of America! But how many people know what they actually do? And how much do you really owe? Well, we’ll go over some basic information about these student loan programs and help you understand everything you need to know before getting started.
What Is a Federal Direct Loan Program?
Direct federal loans are the government’s primary lending program. If you get a direct loan, the U.S. Department of Education lends money directly to you instead of going through a bank. You generally borrow more money for college than if you got a private loan, and repayment begins almost immediately after graduation.
How Do I Qualify?
You don’t qualify until you hit certain financial thresholds. First, you’ll need to complete at least half time enrollment at an eligible school. Second, your family income can’t exceed $65,000 per year unless you’re married filing joint taxes. Third, you’ll need to maintain federally-defined eligibility throughout your undergraduate career (which includes maintaining at least 12 credit hours per semester). Lastly, you should plan to graduate no earlier than six years after you start borrowing.
When Does My Repayment Begin?
Repayment begins when you begin repayment, not when you first signed the contract. Your annual payment amount will be determined based on your original principal balance and your interest rate. You can expect to pay anywhere from two to thirty years depending on several factors including your original principal balance, the type of loan, and your current interest rates.
What Will I Pay?
The total amount you pay back may vary depending on where you attend school, your expected graduation date, and your original monthly payments. However, the majority of borrowers receive between five hundred and three thousand dollars per year. Of course, if you default on repayment, you could face penalties, additional fees, and even loss of future educational opportunities.
Who Pays My Debt?
Although the government pays your debts, it doesn’t own them. So, if you default, you’ll still owe the full amount plus any accrued interest. The Department of Education then repossesses your loans, sells them to lenders at auction, or places them back into circulation. Each lender receives their share of the proceeds d from the sale. Lenders are free to charge whatever interest they want, but they’re prohibited from discriminating against consumers based on their credit history.
Can I Get Help Paying Off My Borrowers?
Yes, but only if you ask for it. A number of agencies provide low-interest financing options in addition to traditional lending methods. These agencies include the following:
Parent PLUS (borrower) – Allows parents to access their own children’s loans and consolidate them under their name, thereby eliminating their liability. Also provides a maximum of $23,000 per borrower.
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What do I need to know about student loans?
A loan is money borrowed by a borrower (you) to pay for expenses. Student loans are a type of debt that’s taken out by students before they graduate from college. These loans are granted by private lenders who offer loans at variable interest rates based on the creditworthiness of borrowers.
How do student loans work?
When you borrow money for school, the lender holds the loan until you finish school or repay it. Then you have the option to start repaying student loans. Repayments could take place over 10 years or even longer depending on your situation. You may also choose to enter repayment under the income-based plan where payments increase as your earnings increase.
Should I get student loans?
If you think you might not be able to repay your loans after graduation, then you should definitely consider getting them. On the other hand, if you already have significant financial obligations, a loan might seem unnecessary. However, many people find that financing their education helps improve their finances during and after college. And, if you don’t want to deal with student loans, you might decide that going to school isn’t worth the hassle. That’s okay! Your decision shouldn’t be based on what others think.
Do student loans go away?
While federal law requires schools to give you information about any student loans you receive while attending school, the actual amount of your debts won’t ever decrease. If you stop making payments on a loan, you’ll still owe the amount of money you originally borrowed plus any accrued interest.
Can I refinance my student loans?
You can sometimes refinance your student loans by contacting your original lender. To qualify, you’ll need to show proof that you’ve tried unsuccessfully to secure employment. In some cases, refinancing your student loans may be cheaper than paying off your entire balance. But, keep in mind that this will only apply to loans originated before July 1, 2009.
Is it possible to discharge my student loans in bankruptcy?
Yes, if you file Chapter 7 bankruptcy, you can discharge federally guaranteed student loans. The good news is that this doesn’t affect your credit score if you’re filing for personal bankruptcy. If you’re considering filing for Chapter 13 bankruptcy, however, you may lose certain tax advantages. Read more about how student loans can be discharged in Chapter 7 and Chapter 13 here.
Will I avoid having to pay back my student loans?
As long as you make timely payments, you still have the opportunity to save yourself from paying back your loans. If you haven’t repaid your loans for ten years, they automatically convert to a grant program. You may also qualify for income-based repayment plans, which means you can pay less money each month than if you were paying back the full amount of your loan.
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I think student loans should be illegal because they are not fair at all. I’ve been paying my loan off for almost 4 years now and I’m still only halfway done. My mom pays her student loan off faster than me and she has less money then I do
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