Tag Archives: loans

Will Your Student Loans be a Burden?

31 Mar

 

Whether you’re an incoming freshman looking into financial aid or in the midst of senioritis ready to graduate from college, student loans have probably crossed your mind. Even if you know how much you will/ already do owe, it still ends up being an abstract figure in how it will impact your life.

student loan burden

A pretty simple rule of thumb to estimate your minimum monthly repayment without using a student loan calculator is to assume you’ll be repaying 1% of what you owe per month. That doesn’t sound like much, but that’s $100 every month for every $10,000 that you owe. So while the average 2016 graduate has $37,712 in debt that means they are paying about $377 every month to their loans.

And then there are people like me who borrowed a little more and are paying almost $550 for borrowing $48,600 ($54,800 thanks to interest).

If you’re not sure how much you’ve borrowed, you can check out the National Student Loan Database System (nslds.ed.gov) to double check how much in federal loans you’ve borrowed.

Even knowing what your repayment amount is doesn’t mean much unless you consider your future salary. A common problem here is that people overestimate their starting salary. Nearly half of 2015 grads thought they would earn $40,000 or more, but in reality only about ¼ of grads actually made it.

So if you’re earning a starting salary of approximately $35,000, your take home pay after taxes will be approximately $2,230 per month (depending quite a bit on your tax withholding and state you live in).

While there’s no hard rule about what a comfortable proportion of loan repayment is, we generally advise students that they are getting into a difficult territory if their monthly minimum repayment is over 20% of their take-home pay. So for the previous $35,000 salary that’s about $44,600 in debt according to this rough formula.

If you’ve ended up in a situation where your minimum amount due is a financial burden then you will want to explore the different repayment plans available to you. Just remember that the standard 10-year repayment plan that you are placed into automatically allows you to pay the least amount of interest and finish in the shortest time frame.

Additionally, if you seek out an income-based repayment plan with the hopes of earning public service loan forgiveness, keep in mind that it could be on the chopping block if politicians continue to see the program costs exceeding their original budget.

Answering the Who, How, & Why of FAFSA

26 Jan

fafsa
Getting you through FAFSA, one question at a time.FAFSAQs

 

  • Who

    • Who Should File a FAFSA?
      If you are interested in getting any Federal Financial Aid, including federal direct loans, you need to file the FAFSA at www.fafsa.gov/  to become eligible. Federal loans are almost always preferable to private loans.  In addition, many colleges’ need-based scholarships rely on FAFSA information to verify that you are eligible. In short, everyone should file the FAFSA – even if you don’t think you’ll qualify for any federal aid

     

    • Whose Information is Needed to File a FAFSA?
      This answer depends on if you are a dependent student or not. Unsure if you’re Dependent or Independent? Check here. (Note: this is not the same as being independent for tax filing)
      Dependent students: You need tax information for both you AND your parents. If your parents are divorced, you need the information on whoever you receive the most support (51%) from.Independent students: You only need your own information unless you are married. If so, you will need your spouse’s information as well.
  • What

     

     

    • What If Things Change After I File The FAFSA?
      If your family situation has a significant change after you’ve filed your FAFSA, and any time while you’re in school, stop by your Financial Aid office to see if you qualify for a “special circumstance”.  These could include job loss, divorce, death of a parent, child birth or other unexpected situations that impact your financial status.

     

    • What Types of Federal Financial Aid are there?
      There are three main types of financial aid:
      1. Grants — Federal Pell Grants do not have to be repaid and are sometimes referred to as “gift aid”.  Grants are similar to scholarships, except that they are often for those who demonstrate financial need, where scholarships can be either merit-based or need-based.
      2. Student Loans — This is the type you hear about most often.  Filling out the FAFSA is required to be eligible for Federal Direct loans.  Federal loans are almost always preferable to private loans from lending institutions, because they have fixed interest rates and flexible repayment options.
      3. Federal Work Study (FWS) — Work study may provide you with more opportunities to find on-campus jobs. Rather than being given the funds in the beginning of the semester like loans and grants, FWS earnings are distributed to you as part of your paycheck.
  • Where

     

    • Where Do I Get the School Code and FSA ID?
      You’ll need the school code for whatever schools you are interested in applying to. They are available here. Your FSA ID is used to login and electronically sign your FAFSA.  Set it up at here.

     

    • Where Do I Get Help?
      College Goal Sunday will be held on Sunday, February 12th at 2:00 p.m. in Indiana and it provides FREE FAFSA filing assistance. It is at Ivy Tech in West Lafayette, but to find a location near you in one of the participating 42 states, go to www.CollegeGoalSundayUsa.org.  You can always call the Financial Aid office of your prospective school to ask questions as well.
  • When

    • When Can I start the FAFSA?
      You can begin the FAFSA any time after October 1st of the year before you plan to attend college. The FAFSA uses the student/parent tax information from two years ago (You could start filing Oct. 1 of 2016 for the 2017-18 school year using your 2015 tax information) . You can estimate the required information to beat a college priority filing date, but the info must be corrected after the taxes are complete!

     

    • When is the FAFSA Due?
      If you are a Purdue student, the FAFSA priority filing date is March 1st, so be sure to have it done by then! Other colleges (and states) have their own priority dates. Check for deadlines here.
  • How

    • How Do I Get my Financial Aid?
      Your financial aid is sent directly to your school and they will apply it directly toward your billing and send any excess aid to you to be used for books and other education related expenses. The exception is Work Study which needs to be earned by working, and is paid via a paycheck.

     

    • How Much is the Maximum That Can be Borrowed?
      Most students don’t know this, but there is a maximum amount of Federal Loans you can take out each year. There is also a maximum amount you can take throughout your college career! If you take the maximum amount for four years, there won’t be as much left for a fifth year if needed. Plan ahead!Remember: Everything you borrow you will have to pay back with interest for the next 10 (or more) years. For every $5,000 you borrow at 6% interest, you pay back $6,661.23 over 10 years ($55.51/ month)
    • FAFSA-brw-chart
  • Why

    • Why Should I Do a FAFSA?
      Other than qualifying for grants and Federal Loans? Many state grants and institutional scholarships require FAFSA information submitted. Even if you aren’t sure, it is always worth submitting!

Have more questions? Ask them in the comments and we’ll do out best to answer them!

4 Loan Forgiveness Programs for Teachers

25 Jan

1. Public Service Loan Forgiveness (PSLF) Program Forgives the remaining balance on your Federal Direct Loans after 120 qualifying payments (10 years). View complete program details at StudentAid.gov/publicservice. Here are some highlights: This program has the broadest employment qualification requirements of the federal programs listed—it doesn’t require that you teach at a low-income a public…

via 4 Loan Forgiveness Programs for Teachers — ED.gov Blog

Create Your FSA ID Today!

24 Oct

fsa id.JPG

October is the first month you can begin the FAFSA for the 2017-2018 school year! An important part of the FAFSA is creating your FSA ID.

This video by Federal Student Aid walks you through the creation of your FSA ID, which you will use annually to file for federal student aid.

https://videopress.com/embed/RMxM3v1R?hd=0&autoPlay=0&permalink=0&loop=0

Now that you know how to create your FSA ID, click here to get started!

What is Financial Aid?

9 Feb

Raysha Duncan, Financial Aid Administrator & Purdue Alumna
www.purdue.edu/mymoney

what is financial aid - open road

So you’ve filed your FAFSA or are considering filing your FAFSA and you’re wondering…what exactly does this get me anyway? Filing your FAFSA makes you eligible for two main types of aid: gift aid and self-help aid. Some schools require that you file a CSS Profile to be eligible for their institutional scholarships. That is not required at Purdue, so I’ll just be covering what we award through the FAFSA, since that is the only application required.

Gift Aid

This refers to all scholarships and grants, or, to put it more simply, all the types of aid that you don’t have to pay back.

Grants are typically need-based aid awarded from either the federal government or your state. The most common grant is the Federal Pell Grant. This is a need-based grant awarded to students with lower Expected Family Contributions (EFC).

Scholarships can be need or merit-based and students can get them from various sources. Typically, students receive scholarships either from their university or from a private donor. There are websites such as www.scholarships.com and www.fastweb.net to help students find all kinds of private scholarships. There are some pretty obscure scholarships out there, so if you look hard enough, you may even find one that fits your eccentric hobbies. Be sure and apply for a lot of different scholarships, but never pay to apply for a scholarship. If you’re being asked to pay to apply, then it’s probably a scam.

For information on grants and scholarships available to Purdue students, please visit the Division of Financial Aid’s website.

Self-Help Aid

This type of aid consists of loans and Federal Work Study. Loans are the most common type of self-help aid; they’re also the only type of financial aid that really makes it on the news. Students are expected to pay back their student loans once they have graduated and depending on what type of loan you take, there may be interest accruing on it while you’re in school. Federal Student Loans consist of Perkins Loans and Stafford Loans. Parents may also have the option of taking out a Parent PLUS Loan to help cover any remaining costs that the student has; Parent PLUS loans are taken out in the parent’s name, so the parent is the one who is expected to pay them back. Students also have the option of taking out private student loans, which are loans they apply for through a third-party lender and are then sent to their college.

It’s important to remember that ALL LOANS HAVE TO BE PAID BACK, so always try to borrow as little as possible so you aren’t burdened with huge loan payments once you graduate college.

 

Purdue students will want to file their FAFSA by March 1st to meet Purdue’s priority filing deadline. Incoming freshmen to Purdue who filed their FAFSA by this date or “on-time” can expect to receive their financial aid award mid-March and continuing students at Purdue who filed “on-time” can expect to receive their financial aid award mid-June. Feeling anxious? You can also check out the CollegeBoard Net Price Calculator to get an estimate of the aid you might be eligible for at Purdue.

The Purdue University Division of Financial Aid has also created a step-by-step guide on How to Apply for Financial Aid checklist on their website.

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