Frequently asked questions about student loans
When you take out student loans, you are borrowing the money to pay for your education, with the expectation that you will pay that money back to the lender in full, plus interest, at some point in the future.
According to the Student Aid website, “ Federal student aid from ED covers such expenses as tuition and fees, room and board, books and supplies, and transportation . Aid can also help pay for other related expenses, such as a computer and dependent care”.
While, in theory, you can use student loans (federal or private) to pay for most things related to your education, you should limit your usage of your student loans to things that are strictly crucial to your education.
Taking a film class and need to pay to rent some expensive equipment? This can, and should, be covered by your student loan if you have no other options.
Feeling hungry and deciding to order a bunch of pizzas for you and your roommates? This should NOT be paid for with your student loans. Aside from the fact that it is simply not allowed, even if these actions go undetected, spending your student loan money in frivolous ways will only lead you to having to pay back even more money later on down the line to the entity you borrowed it from.
To put it simply, yes. If you fail to pay your student loans back according to the designated schedule (say you are late to submit a payment or cant make a payment entirely) your credit score will unfortunately suffer the consequences.
However, its important to note that different loan options have different terms of repayment. For the most part, federal loans are much more lenient than private loans; federal loan servicers usually wait 90 days before reporting a late payment, whereas private servicers usually only wait 30 days.
You can apply for federal student loans by filing your FAFSA, and you can apply for private student loans through each individual lenders website
One of the major bonuses to taking out federal loans is that there is opportunity for your loans to be forgiven, meaning you will no longer be required to make payments back to the Department of Education, the entity that you borrowed money from to pay for school.
There are different types of student loan forgiveness for each type of federal loan. Also, due to the impacts of COVID-19, the White House and Administration has moved to extend the pause on student loan repayment through .
Taking out loans for school is a big step. Before you make any big moves in one direction or another, make sure you know and understand the following tips and tricks:
- Although taking out loans of any kind is extremely common, they should be considered a last resort . Before you take out loans, spend some time mapping out your college costs and determining what is or will be covered through scholarships, your family or personal income/savings, a federal work-study program if youre eligible, and other outlets.
- If you need to take out loans to pay for school, federal student loans should be exhausted before private ones .
- Before you take out a loan of any kind, make sure you read the terms and conditions very carefully to understand when you need to start paying it back.
- Stay organized throughout the process. Use an Excel spreadsheet to keep track of how much youre borrowing, and make a folder on your computer to installment loans New York keep track of all loan documents that you accumulate.