Mixed Bag Monday: Of Student Loans and Student Debt

It’s one of those truisms of modern life: if you’re going to be a great success, you need education beyond high school.  Alas, the days when you could graduate from high school (if you even got to that point), enter the workforce and earn a sizable income, enough to provide for yourself and your family, are long since past.  (As are the days when the US was the center of industry and manufacturing, with Europe still reeling from World War II; but this article isn’t about the changing geopolitical realities of our world.)

No, it’s widely agreed that success in the modern world requires an advanced degree, be it a bachelor’s degree, a master’s degree (as I’m currently trying to earn, myself) or a doctorate.  For most of us, that means taking out student loans.  As a service to students of all stripes, here are some of the answers to many of the questions you might have about the student loan process (as well as that inevitable fate of PAYING BACK the student loans).

Q: How Do I Get a Student Loan?

A: Well, in general, there are two sources for student loans in the US: the federal government and private lenders.  The federal government will typically back private lenders to administer the federal government loans.  In order to apply for any federal student loans, you’ll need to fill out the Free Application for Federal Student Aid (FAFSA).  When submitted to your school, that will allow you to find out what types of student loans you can obtain, the amounts of money you can borrow, and the interest rates you will pay when it’s time to pay the loan back.

Q: What Can Student Loans be Used For (and Not Used For)?

A: It can be tricky to figure out the student loan limits.  On one hand, student loan funds are only supposed to be used for education related expenses.  On the other hand, your student loan contract might enable you to use the student loan money (the amount beyond what is needed to cover your tuition) to cover education-related expenses as diverse as your rent and transportation costs.  You should stick with using your student loan to cover school related costs (no fancy vacations), but check with your student loan provider to learn exactly what limits there are on your loan.

Q: When Do I Have to Pay My Student Loans Back?

A: Typically, your student loan will have a grace period upon your graduation, a six month period where you don’t have to pay back your loan.  (Allowing you time to get a job.)  You’ll then have to pay back your student loans according to one of several different schedules, from standard (over the course of ten years) to extended (over an up to twenty-five year period).   You can also choose graduated schedules that enable you start paying smaller amounts and increase the payments over time, or income-contingent plans linked to how much you earn.

Q: In What Situations Do I Not Have to Pay Back My Student Loans?

A: Good news: there are several situations where you can get all or part of your student loans eliminated.  Bad news: most of those situations are not the sort of thing you’d want to happen to you.  Death is a big one, as is total and permanent disability.  You can also get a partial discharge for military service or full-time teaching.  There are some things that don’t eliminate your student loan obligations, bankruptcy being a major one.  In any event, your best course of action is doing what you can to pay off the debt properly.

Q: What Alternatives Are There to Student Loans?

A: You don’t necessarily have to get a student loan in order to pay for college.  There are other options, including federal grants and scholarships offered through your school, both of which can cover a substantial portion of your college costs, and have the advantage of not needing to be paid back.  You can also pay the costs yourself.  It’ll be rough, but there are ways you can earn the money and still focus on your studies, from being a Resident Assistant (and possibly getting free lodging) to being a Teacher’s Assistant (and helping shape young(er) minds as a bonus).

A little bit of time and effort is all you need in order to gain a nice education and not be in terrible debt for the rest of your life.  Good luck on the education process.

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