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5 facts about student loans that you need to know
The majority of students attending college will need to finance at least a portion of the cost required to further their education, most likely through student loans. While taking out a student loan may be a viable solution, there are both benefits and drawbacks of signing on the dotted line.
Here are five things you should know about the who, what, and how much of student loans.
1. Complete the FAFSA–NOW
FAFSA is the FREE Application for Federal Student Aid, and it’s the gateway to all federal financial aid, which also includes student loans. The Education Department offers scholarships, work-study, grants, and loans for eligible students in the amount of $150 billion each year. The only way to see if you qualify is to complete the application. The federal deadline is June 30, 2018, but the sooner you hit the submit button, the better, so don’t procrastinate.
2. Federal loan vs. private loans
Federal student loans often offer lower interest rates, a friendlier repayment schedule, and typically don’t require Mom or Dad to cosign to be your safety net. The income-driven repayment schedule is highly attractive, but if you have trouble making your monthly payments on that entry-level salary, you’ll also have deferment or forbearance options to consider. A private student loan is often used to fund the shortfall left by federal loans. They typically come with a higher interest rate compared to federal loans and your parents will need to cosign on the loan.
3. Parent PLUS loans
Every parent would love to save enough money to fund their child’s education, but if that’s not your reality, you might consider a Parent PLUS loan. This type of loan is available to the biological or adoptive parents of dependent students, and it does require a credit check. They’re not especially cheap, though. In 2017 the interest rate was 6.31%, the highest rate among all federal student loans.
4. Student loan default
Even with the generous repayment options, sometimes borrowers default on their student loan. You should be aware that if you default on your loan, you’ll lose all of the benefits that were so attractive when you applied. That includes deferment, forbearance, and any other repayment options that were offered in the past. You’ll also forfeit any future access to federal education aid while your loan is in default.
Sadly, it doesn’t end there. The lender may also report the loan default to the major credit bureaus so your credit score will take a serious hit and the government has the authority to garnish your wages and claim your annual tax refund. And don’t forget about your cosigner, if you have one. They’ll be subjected to the same actions.
5. Student loan forgiveness
Who doesn’t wish that their debt could just disappear? Sometimes it’s called loan forgiveness and other times it’s referred to as loan discharge or cancellation. They’re all a little bit different, but the result is essentially the same.
Loan forgiveness plans may be available for people in education, public service, healthcare, military and other professions. There are specific requirements that need to be met, and not all loans are eligible for forgiveness.
Student loans may also be discharged for personal reasons, although this is very rare. They include school closings, bankruptcy, disability, identity theft or false certification, unpaid refunds, and fraud.
School loans are an excellent means to help fund your education, but all options are not created equal. If you know the rules and can budget your repayment, it can be a wise investment in your future.
The six most common financial mistakes college students make
If you’re a college student, managing money on your own is just one of many brand new adventures. The combination of newly found freedom and a lack of money management experience can result in some costly, real-world fumbles. At a time when you’re just beginning to build your financial reputation, steer clear of these six common money mistakes:
1. Borrowing too much
If you’re borrowing money to pay for college, make sure those funds are dedicated solely to school expenses. Remember that once you graduate, you’ll have to repay that debt. Don’t compound it by financing your annual Spring Break trip just because it’s listed on the school calendar. Make smart decisions about what qualifies as an educational expense and only borrow the amount you really need.
2. Not living on a budget
Creating and living on a budget is a must for a college student living the college life. There’s likely a limited source of income that includes an allowance (if you’re lucky), wages, and savings that need to be closely monitored and spent with care. Go old school and use a notebook, a spreadsheet or an online budgeting tool to help manage your budget and keep track of your monthly spending. Otherwise, you’ll be living a life of ramen noodles.
3. Relying on credit cards
It’s easy to fall into a trap with credit cards. If you use your credit card to pay for an item, the odds are you’ll spend money that you don’t have and rationalize it by saying that you’ll pay it off by making monthly payments. Use a credit card if you need the item, it fits into your budget, and you can pay it off at the end of the billing cycle. End of story.
4. Stopping the scholarship search
It’s true that many scholarships are awarded to incoming college freshman, but there are a significant number of scholarships available to current college students. Most people hit the snooze button sophomore year and miss out on available cash. Continue to search for and apply for scholarships and grants throughout your college career so that you can fund your education and keep your debt at a minimum.
5. Skipping class
Whether it’s partying too hard, oversleeping, unpreparedness, or just plain laziness, there’s no real justification for skipping class. When you’re not in attendance you’re not learning the material, which obviously increases your chance of failing the class. Before you graduate, you’ll need to repeat the class and PAY FOR IT AGAIN. You don’t need a Ph.D. to know that’s a total waste of time and money.
6. Missing deadlines
Maybe it’s buying game day tickets in advance to take advantage of the discount, being conscious of the last day to drop a class so you’re still eligible for 100% refund, or returning rented textbooks on time in order to avoid the late fee. Whatever the case, there’s money at stake when you miss deadlines. Most of the time it’s because you’re disorganized. Get a calendar, mark the dates as soon as you know them and review your calendar daily. Huh, look at that, money in your pocket. Shocker.
The bottom line
We know, you’ve heard it a hundred times…”College life is an exciting experience, but it also brings a new set of responsibilities.” If you take away anything from this, we hope you’re just more aware of these financial pitfalls and do something to avoid them. We promise we won’t let on that we gave you any advice and when you’re finally feelin’ good about your debt management, you don’t even need to thank us!
Congratulations to our 2017 John B. White, Jr. Memorial Scholarship Recipient, Edward Holliday!
We are thrilled to announce that the winner of the 2017 John B. White, Jr. Memorial Scholarship is Edward Holliday of Atlanta. Edward received this scholarship not only for his impressive academic achievements, compelling essay and glowing letters of recommendation, but for his remarkable work in the community and detailed plans to continue that work through college and into adulthood through his career.
Inspired by their late grandmother, Edward and his brother, Xavier, co-founded a non-profit organization called Brothers 4 Literacy & Life, which aims to provide access to books and other educational and life supplies to deserving children around the globe with meager resources. They are currently working with 3 schools in Africa, one in Jamaica and a local school, partnering with students who live in non-English-speaking homes to improve their language and reading skills.
Edward has also served his community through his work as an Eagle Scout, as a volunteer at The GivingPoint Institute, as a contributor to the Audio Visual Ministry and the Youth Usher Board at his church and through the Service Corp, Community Service Club and the Student Diversity Leadership Council at school. These organizations have allowed him to impact organizations such as The Agape Center, The Trinity House, and many others.
He has been awarded the 20 under 20 Award from the Atlanta InTown Paper, the Georgia Youth Leadership Award from 21st Century Leaders, the 2017 YOU International Award, a letter of recognition of service from Georgia Secretary of State, Brian Kemp, 2nd Place Teen Volunteer of the Year award from the Atlanta Fundraising Professionals and the Presidential Volunteer Service Award from President Barack Obama in 2015 and 2016.
Please join us in congratulating Edward and wishing him the very best as he begins his time at Auburn University this fall!
About the John B. White, Jr. Memorial Scholarship
John B. White, Jr. served the members of Georgia’s Own Credit Union for 33 years as an insightful, kind and impactful member of its Board of Directors. He was a strong advocate for our members and our employees and left an indelible imprint on our organization. One of the biggest constants in Mr. White’s life was service, as illustrated by his commitment to outreach in every aspect of his life. As a young man, he served our country during the Japanese Occupation, he volunteered throughout his professional career at the Bell South Classic and for other organizations such as Kiwanis, Rotary, United Way and the Boy Scouts, he sat on various different Boards and became involved in the symphony and art museums in every city in which he and his wife, Ann, lived. He was active in his church, in his retirement community and took enormous pride in championing the pursuits of his children and grandchildren.
To honor the legacy of Mr. White, the Georgia’s Own Foundation has established the John B. White, Jr. Memorial Scholarship to be awarded to a graduating high school senior who is as inspired by the world around them and is as committed to making their community a better place as he was. As Mr. White’s belief that education and service in tandem will make our world a better and more harmonious place to live, this scholarship will help fund the recipient’s collegiate tuition as an acknowledgement and thanks for their previous accomplishments and future contributions.
APPLICATIONS FOR THE 2018 SCHOLARSHIP WILL BE AVAILABLE IN APRIL 2018.
2017 What’s Ne[x]t Scholarship Winners
Congratulations to the 2017 What’s Ne[x]t Scholarship winners! A total of $15,000 was given away to three deserving students to help them pursue a higher education. Open to Georgia’s Own members 25 and under, students submitted applications along with a video telling us where life is taking them, what their passions are or what they wanted to accomplish. From more than 100 applications received, our judges selected the following winners:
$8,000 Scholarship Winner
Jude Thornton (Douglasville) – University of Georgia
$5,000 Scholarship Winner
Anna Fontaine (Stockbridge) – University of Essex
$2,000 Scholarship Winner
Benjamin Woods (Snellville) – Georgia Gwinnett College
Congratulations to Jude, Anna, and Benjamin – we can’t wait to see the great things you’ll do in the future – and thank you to each and every one of our members who entered this year’s scholarship contest.
Should you borrow to get an MBA?
If you’ve decided that an MBA is an important investment in your career, then your next step should be to determine how to finance your next two years of study. While many students rely on a combination of their own savings, help from family and other outside sources, other students have only to rely on the availability of grants, loans, and employment. If you’re a member of the latter group, don’t be discouraged. There are multiple resources that can help you overcome the financial challenges.
Start where the money is free. Grants, also called fellowships, fall into this category because they do not need to be repaid. A grant is awarded from the government, a foundation, or a trust and is typically given to an institution, a business, or an individual. The criteria for receiving a grant is not necessarily achievement based and can be more general in nature.
A business degree makes you a valuable asset to your employer, which is why your company may be willing to finance your post-baccalaureate education. They may already have a tuition reimbursement program in place. If not, submit a proposal that highlights the benefits of investing in you and your future at the company. Interviewing for a new position? Consider using tuition reimbursement as a negotiating tool.
Student loans, the most popular education financing tools, fall into the opposite category because they require repayment. Federal student loans can be either subsidized or unsubsidized, which determines whether the government or the borrower is responsible for paying the interest while you’re in school, as well as the generosity and flexibility of the loan repayment terms.
Private loans designed to meet the needs of an MBA student can also be attractive options when it comes to supplementing other sources. In fact, if you have excellent credit, a private lender may be able to offer a more competitive interest rate and friendlier repayment terms. Most private lenders don’t charge application, disbursement or origination fees and you can refinance your loan if interest rates go down or your credit score increases.
While they may not be your first choice, don’t cross private loans of your list quite yet. They do have their advantages, especially when you combine them with other sources to create a flexible and smart financing package.