Post by roseflower on Nov 26, 2014 23:04:42 GMT -5
So far, we haven't had to utilize any type of loans for DH schooling but we may have to for his final year. It is not an immediate need but I was wondering if I could get some information. I am not familiar with school loans at at all...which ones are best, what to steer clear of etc. I am sure as he will be able to talk to a financial counselor at the school at some point, but I'd love to be armed with information and know many of you have some great advice!
Post by bostonmichelle on Nov 27, 2014 7:45:53 GMT -5
I know to get federal loans you need to fill out a FASFA. So if it's a possibility for academic year 2015-2016 you have to fill it out this spring. I know for my grad school, I just filled out the FASFA and I believe I contacted the school to get the loans. I didn't need them for all the classes so I was able to tell the school how much I was paying in cash and how much was financed. I was able to pay off 1-2 classes worth of loans very quickly within that semester and I didn't get charged interest. I forget the rules but you could look it up if you think that's something you would do.
Suze Orman strongly advises to stay far, far away from private student loans. You may want to download her podcasts for a little while if you don't already listen, as this is a common topic.
Keep an eye out for the terms, SLs are funny...many can't be discharged in bankruptcy, and some will need to be paid even if the student passes away (god forbid.)
You want a government loan - apply through the school - FASFA. The interest rates will be competitive and the government will pay your interest while you are still in school, so you aren't accruing more debt before graduation.
Post by whitepicketfence on Nov 27, 2014 8:40:23 GMT -5
He will want Federal student loans vs private loans. There are two types of federal loans: Subsidized and Unsubsidized Stafford. The Sub loan is need based and usually carries a slightly lower rate. This loan does not accrue interest while your DH is in school. The Unsub loan is available regardless of need and does accrue interest while he's in school. Payments on both are deferred for 6 months after he graduates or drops to less than half-time enrollment. You can opt to pay the interest on the Unsub loan while he's still in school.
A FAFSA is required for both loans. The financial aid office will then automatically determine his eligibility.
Post by tacosforlife on Nov 27, 2014 8:53:03 GMT -5
He should check with his financial aid department before doing anything.
Federal loans are generally considered preferable because they are easier to put in forebearance and can be forgiven if you are in public service. HOWEVER, it is not 100 percent always guaranteed that they are the right option. Because my law school has negotiated favorable rates with a bank, my private loans are all at 2 percent while my federal loans are all over 6 percent. My situation is not the norm, but it illustrates why you should talk to the financial aid office.
Post by roseflower on Nov 27, 2014 12:21:41 GMT -5
This is awesome information. Thank you so much! DH will definitely work with the financial aid office if it in fact becomes a need. I just wanted to have a starting point because I have no experience with student loans whatsoever and wanted to make sure we didn't make a mistake based of ignorance.
You want a government loan - apply through the school - FASFA. The interest rates will be competitive and the government will pay your interest while you are still in school, so you aren't accruing more debt before graduation.
This is only true if there is a high financial need and the student gets a subsidized loan.