We need to have a talk about student loans. You know why? Because student loan debt is pretty much an epidemic for our generation. Kids are getting themselves tens and hundreds of thousands of dollars 💵 in debt before they're even people yet. They're going into debt as they're trying to become who they want to be when they grow up. In spring of 2016, graduating seniors carried an average of around $37,000 in student loan debt. As a result, most of them will pay almost $300 a month 📅 for the next decade. We grew up with this idea that our parents, grandparents, aunts, uncles, fake aunts and uncles, friends, our parents' work colleagues, and all these other people had been putting money 💷 into a mystic, mythic college 🎓 fund since the day we were born. That was very rarely the case. The majority of us rely on federal loans, grants, and the odd scholarship. We pray 🙏 to the great god FAFSA – and we pay for a long, long time. Remember, though, that knowledge 📗 is power ✊ – and fortunately, this knowledge 📚 is free.
1. It All Begins with a Question: do You Really Need Any Student Loans?
You really might not need them. It's possible you can cover the cost yourself. For instance, if you choose to take prerequisites at a community college, then transfer to a four-year university, or if you can get everything you need at a two-year college, you might be able to pay your own way quite easily. There are also scholarships in the unlikeliest of places as long as you're willing to do the legwork and search for them. You can get a job, start saving in high school, sell something or start a small side business, and you can also request that all birthday 🎂 and holiday 🎇 presents be cash 💲 gifts because every little bit helps.
2. Find out Exactly What Types of Loans Are Available to You
You're not entirely limited in the aid available to you, either. Don't give up even if you don't score any scholarships. Federal student loans are the most common option – this is why you fill out the FAFSA.
You can get Direct Subsidized Loans if you exhibit financial need. You have to pay back these loans six months after you graduate, but you don't owe interest.
Direct Unsubsidized Loans are available no matter what your level of financial need, but you have to pay them back if you fall lower than half-time enrollment status or six months after leaving school 🏫 and, after the disbursal of the loan, you owe all of the accrued interest.
Direct PLUS Loans are available to supplement any costs that your other loans don't cover and, if you're an undergrad, it will be under your parents' names. You have to pay these loans as soon as they disburse.
The Federal Perkins Loan is available on a by-school basis to students with an exceptionally high need for financial help and you have to pay back this loan nine months after you fall below a half-time enrollment status or leave school. You don't owe any interest during your enrollment or your grace period, though.
Grants and work-study awards are also available through FAFSA. Most students who have financial need receive grants, which you don't have to pay back at all. Work-study programs include a specific sum for part-time work and you can try for a job that's related to your major.
Private student loans are yet another possibility. You apply for these through a credit union, bank, or another private lender. They're typically harder to get and harder to pay back. You'll likely need a co-signer, which is something to remember when it's time 🕘 to pay back your loans.
3. Now Figure out How You Can Apply for Them
Well, for one thing, you have to fill out the FAFSA, but do remember that you don't have to take something just because you qualify or because it's offered. Choose what you're comfortable with and work out a plan if you need to supplement. This is something you'll probably do with your parents, at least as an undergrad. It's complicated and awful and you'll hate 👎 it, but it's helpful.
To apply for private student loans, you have to talk to a lender at a credit union or bank. You can also check out online marketplaces, which let you compare lenders.
4. This is NOT the Way to Use Your Student Loan Money
It bears repeating: you don't have to take everything you're offered. If you don't need it, don't take it. It's not free. You may still have extra money 💴 even if you accept the minimum you need. Although it's tempting, avoid using it on anything too extravagant. Use it for books, rent, transportation, school 🏫 supplies, food, but don't pay for a trip 🌏 or go on a huge spree. As you accept the financial aid you're offered, do so in this order: grants and scholarships first; work-study; federal student loans; school or state loans; and private loans. Borrowed money 💸 always comes last.
5. Pay Attention ⚠️ to when Your Repayment Plan Starts
It's better to start paying back your loans right away. Some students even start paying back their loans before they graduate, which is something you might want to consider. No matter what, pay attention ⚠️ to when your payment plan starts, otherwise you risk doing damage to your credit report due to late or missed payments. You don't have to take advantage of your grace period if you don't want to, but it gives you time 🕟 to find a job or apply to grad school. Most private loans offer some sort of grace period, as well.
6. Keep Track of the Amount You Owe
Federal loans and private loans are different, so make sure you know what you're paying back and how much you owe on each loan. A visit to studentaid.ed.gov shows your grants and loans, how much you how, including interest, the status of your loans, the repayment plan for all of them, and your loan servicer – that's where you send 📪 payments. Updates for private loans vary from lender to lender, and they generally send their own packet of information.
7. “D” is for “default” and This is What It Means for You
Defaulting is bad. I speak from experience. I'm not proud 🇩🇪 to say it, although I am proud to say that I am out of it and almost done paying for my education. Yay! Defaulting basically means that you hide your head 👦🏽 in the sand and ignore your loans because paying them back is impossible, but rather than seeking another option, you just ignore all the bills. You can run, but you can't hide forever. A default tanks your credit score. You have nine months before you default, then you get to deal with collections because the whole thing is due RIGHT NOW – you can't start another repayment plan, you can't defer, they can garnish your wages, take your tax returns … it's brutal. Defaulting on a private loan occurs after three months of missed payments and they can take you to court.
8. Look into Deferment or Forbearance Instead
Deferment is a better option. The government, at least, is usually quite happy 😄 to work with you – better that than deal with a default. You can defer your loans if you return to school, lose your job, face other economic hardships, are in the service, and under many other circumstances. You may not qualify, but even then, you can look into getting a forbearance, which allows you to
9. You Have Different Options for Repayment
There's a standard repayment plan that usually involves paying off all of your loans within ten years, but the monthly payment is generally high. With federal loans, you can look into payment plans that depend on your income, as well as Pay as You Earn, or PAYE, repayment plans. It involves paying over a longer period of time, but it's often worth it. Unfortunately, private loans don't offer these options.
10. There Are Also Ways to Simplify the Payback Process
Refinancing and consolidation can lower or at least simplify your loans. Consolidating your loans involves putting all of your loans together so you have one payment. While it may or may not lower your payment, refinancing does. Essentially, you're paying a lower monthly amount over a longer period of time, the downside of which is that you end up paying a whole lot of interest over time.
11. You Might Even Qualify for Student Loan Forgiveness
You might be surprised. Sadly, I was not, but I hope that many of you are lucky 🍀 enough to meet the guidelines for student loan forgiveness. To say it's helpful is an enormous understatement. Teachers, members of the Peace ✌️ Corps and volunteers for ACTION, members of the military, nurses, medical ➕ technicians, law enforcement officers, corrections officers, Head Start employees, and family 👩👩👦 services workers can all qualify for loan forgiveness. If you have private loans, you can join a business 👔 that offers to help its employees pay back their loans.
12. There's Always Help – You Just Have to Know Where to Find It
Hopefully, this guide is helpful, but of course, it's not your only option. studentaid.ed.gov has a wealth of information online, you can talk to the financial aid office at your school, or you can google. I advise the latter anyway because you can find all sorts of ingenious ways to repay your loans.
Don't let this scare 👻 you to death. Financial aid isn't nearly as scary 👹 as it seems. Debt is, though. Debt is terrifying. The price we pay for education 📚 is kind of heinous, but hey. I'm depressed now. How about you?