Pay Off Student Loans by Keeping a Reasonable Balance When You Graduate in Four Years
Keeping a reasonable student loan balance requires an immense amount of planning, organization, and discipline, but you can do it. Some kids can’t pay off student loans because they are spending way too much time in college, going five or six years for a four-year degree. Some have to work more than expected, some drop classes, some feel they can’t get all of their classes, and some don’t force themselves to decide on a major course of study when it is time.
Organize yourself, and graduate in four years no matter what. If you want to do something else later, pay for it with cash after you start working, or use your employer tuition reimbursement plan some employers offer.
Some students drop classes, some feel they can’t get all of their classes, and some don’t force themselves to decide on a major course of study when it is time. Organize yourself, and graduate in four years no matter what. If you want to do something else later, pay for it with cash after you start working, or use your employer tuition reimbursement plan some employers offer.
The Nightmare Scenario of Getting Student Loans and No College Degree
It seems hard to believe that students are taking out thousands of dollars of student loans, and not getting the college degree that comes with it. But, that is happening all the time. I recently listened to a radio show where the host asked listeners to call in with their student loan balances and tell if they got their dream job. He got the surprise of his life when several people, calling in from all over the region said they had $50,000, $70,000 and even $100,000 in student loans, but left college with no degree.
They gave various reasons; some fell behind in grades and were asked to leave, some became ill and had to leave, some did not qualify for the last semester or year of student loans to finish their degree because they reached their maximum eligibility, some had to quit and work awhile and did not return.
There were many reasons. Here is the sad part, once the loans payments start if payments are not made you are sent to collections, when you are in collections you have to jump through hoops to qualify for financial aid again, so you can return to school. If you don’t pay your way out of collections and start making payments’, your student loan balance will increase exponentially every single year, due to added penalties’, including collection company fees and interest rates. Avoiding collections is the most encouraging reason you should pay off your student loans as soon as possible.
Pay Off School Loans as Early as Possible to Avoid Possible Catastrophic Events
If you can’t pay off student loans after your grace period is over because you don’t have a job in your field, you can apply for government help. You can get an Income Based Repayment Plan or IBR Plan set up by the federal government, created under the Obama Administration. When you are adequately employed your payments will return to normal. In addition to paying your school loans no matter what to protect your lifelong credit, think about paying them off early. Parent loans are not eligible. The bad part of the Income based repayment plan is that, your payments are so low they usually don’t cover most interest or principle. This causes your balance to balloon. I have had students tell me a balance went from $30,000 to $70,000 in a few years or even worse. This is one reason you should do everything in your powers to pay your full payment immediately, and extra to the principle will pay off your student loan early.
When you pay extra money to principle, you can pay off your loans early. Do your research with your school loan providers, and make sure you pay them off correctly and monitor your statements. Another way to bring down your loan balance is with the governments [service oriented repayment plan] if you work for a non-profit.
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A Problem Many Students Don’t Discover Until After They Are Enrolled
Most financial aid packages at four-year colleges cover only 80% of costs for the poorest students as well as everyone else, an exception is a full scholarship that covers all income levels. Many poor and middle-income students don’t discover this fact until the end of their freshmen year.
Here is an actual example a college student gave me: a young man was told his college would cost $13,000.00 for the year, all but $2500.00 was covered by his financial aid package, he wasn’t told about this gap in financial aid until the end of his first year. His single mom had no money to help him.
He was asked not to come back until he could pay the $2500.00 balance. They told him the computer would not allow him to register. Another case, that was taken up by a local senator, is that of a young girl who took out $55,000.00 in school loans, she was told that was her maximum, and needed to find another way to pay for her last year and get a degree. She informed them that she had no other way. You can find out how difficult it can be to repay student loans by reading about it at the Student Loan Justice site.
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Debt-Free College Can Happen When You Understand The Various Options You Have
Getting a debt-free college education begins with a deep understanding of the different types of colleges and universities. There are many different types of colleges you can attend, and it is important that you know the difference between them. Not all colleges and universities are good for all people.
You must know which is best for you, both financially and academically. I will start with a brief explanation of junior colleges, (also called community colleges), and end with for-profit colleges.
Junior Colleges Your Best Value for Debt-Free College:
If you want to get a certificate or a 2-year AA (Associates of Arts) degree in something that has high job value, the community college is a best value. If you are poor, low income or a struggling single parent you may be able to attend with a Pell Grant, avoiding loans. If you do have to get loans they may be minimal.
Do your research, and work out your best solution. You must keep yourself motivated if you attend a community college. Some find it difficult to focus since you are no longer in high school, but also you don’t have the attention of a four-year college.
You can also later transfer to a four-year college to complete a bachelors’ degree if you decide to get it sometime in the future. Transfers are allowed at most four-year colleges.
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State Colleges and Universities:
Your absolute best value for colleges and universities, under junior colleges, are your state colleges and universities. These colleges and universities have the lowest cost of tuition and fees for a four-year degree for most colleges. The books and room and board, as with all colleges and universities are extra.
If you live at home or with a relative a state college or university can be a real value and leave you with little or no loans. Most employers in local towns gives preference to their local state college and university students for employment, since they usually know the quality of those schools.
For poor and lower middle class students many can go to their local four-year college with a Pell Grant and part-time job, leaving them with no school loans if they live at home. This is huge. Most HBCUs are priced similar to state colleges, a few are priced as expensive private colleges or universities, so remember to do your research.
Private Colleges and Universities:
This includes famous and not-so-famous colleges and universities. Some of the colleges that fall into this category are expensive Christian schools, some are ivy league schools and some are small little known colleges and universities. They all have one thing in common, and that is enormous costs.
Enormous costs that will leave you with school loans of $40,000 to $200,000. This is a near tragedy for poor or middle income students, these loans could take 30 years to repay. No college graduate should be braced with that much of a load on their backs for so long.
These schools have enormous hidden costs, so it is imperative that you research costs at the schools’ website, otherwise you could be left with severe sticker shock after you start. You can get a good job if you go to an inexpensive school, as well as an expensive school, so why not protect yourself, your finances, and your future, with a low-cost college or university.
For- Profit Schools, Colleges, and Universities:
In for-profit colleges, the learning is usually quick, the courses are short, and the costs are high. How do you know if a school is for-profit? They do a lot of advertising on TV, they are usually located in a strip mall, business park, office building or online only – they don’t normally use college campuses. When you research for-profit schools the graduation rates are usually very low and the student loan pay-back is also very low.
They offer short, quick programs and degrees. You may have to do a lot of research to find them listed as for-profit online. Some of them claim to be non-profit, but they are not. Many of them give college degrees in a little as 1-2 years, or certificate programs in as short as 6-8 months. Some employers don’t recognize degrees from for-profit colleges. Since for-profit colleges have been accused of and found guilty of numerous problems against students, some are now calling themselves non-profit. But, they are still for-profit with another name. Most are located in office type buildings, or store fronts, they offer quick classes and very poor financial aid packages, with education that is not always recognized by employers.
The biggest problem with these schools are that most of them include loans for even the poorest students, the courses are often times quick, they offer a lot of certificate programs that require the passage of an exam to get your certificate.
Many kids don’t pass the exam because the courses are so quick, so they don’t get their certificate, and now they have loans with no ability to get work. This is usually the most difficult way to get debt-free college.
The government has recently cracked down on for-profit schools since the default rate on exams, including board exams is high. One for-profit nursing school had a pass rate on board exams of zero. None of the students passed the nursing board exam, but they all had loans they could not repay.
One type of for-profit school that was closely scrutinized was found to brace students with near $80,000 in school loans, this was the Corinthian Colleges.
After petitions and media attention, the government forgave all their student loans with forgiveness, this is rare. The problem was that students could not get jobs after attending. The employers told them they did not recognize the school as adequate for job placement.
The students were told they would have no problem getting jobs when they enrolled. Itt technical Institution was recently shut down due to its predatory methods against its students.
It is a part of the government crackdown on predatory for-profit schools. You can search google for a list of for-profit schools that have been closed by the government. Understand the current student loan debt crises to keep your student loans at 0 or very low.
Financial aid packages in for-profit colleges almost always includes loans, and for many who can’t get jobs, it is not possible to pay the loans back. These loans can leave students with a lifetime of poor credit.
Your best bet for debt-free college:
The best way to get debt-free college is 1. Go to a junior (community) college on a Pell grant, work part-time, and live at home. 2. Go to a state college or university with Pell grant, work part-time, get a relative to help, and live at home. 3. Go to a state college or university with the help of a relative or on a full scholarship. 4. If you decide to go to an expensive private college or university, go with the help of a relative or a guaranteed full scholarship or fellowship for graduate school.
Understand that cost is the most important factor when it comes to choosing an education with debt-free college. It is absolutely essential that you know all cost and academic programs of your chosen school, by reading their online catalog. A last reminder, that if you do not pay off student loans you have signed for, and you get behind, the government will catch up with you, and garnish your check.
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Your Scholarship Search
Understanding financial aid and all it should offer you can keep your student loans low. When you apply for financial aid and you are low or middle income, you may qualify for a financial aid package. That package usually includes loans, the more expensive the school, they larger your loans will be in your package.
The best defense against high debt is high grades in high school or college. Either can lead to college scholarships. Your scholarship search should be extreme and early in high school. Search and apply as if your life depended on it. Ask family members to help, show them your grades, discuss your plans.
Many scholarships go unfunded simply because there are no applicants. Study and understand everything about financial aid at the federal financial aid website, FAFSA, that is where you can avoid financial aid mistakes the most.
And mostly, apply early, and place every single college you remotely think you are interested in on your application.
When you apply online, which is best, the college you choose will be the college your award is forwarded to.
Study and understand everything about financial aid at the federal financial aid website, FAFSA, that is where it all starts. And mostly, apply early, and place every single college you remotely think you are interested in on your application.
When you apply online, which is best, the college you choose will be the college your award is forwarded to.
Don’t Go to College Blind
Avoid financial aid mistakes by reading your college catalog online, understand all your college offers, this you should find information about financial aid at your given institution. Your registrar’s and financial aid office will have more. Understand what courses you must take to graduate with that degree in four years.
If you are not sure what you want to do, you should have some ideas since you are going to college. Choose at least three fields you are interested in and have good job prospects, make sure you get the general education courses to major in each of those three fields. No matter what, major in one field by the beginning of your third year so you can graduate in four years, get a job, and start paying down debt right away.
Don’t linger with indecision, and don’t allow yourself to get loan defaults, and later a lifetime of bad credit. Your credit rating is one of the most important assets you have for getting low-interest rates later and your ability to rent an apartment, buy a car, or buy a home.
There are many ways you can go to college debt-free if you concentrate on affordable colleges, Pell Grants, scholarships, understanding financial aid packages, living at home, working, and relatives helping, should keep you with low or no debt.
Should You Refinance Student Loans to Make Payments Affordable?
Some students will not have an option except to refinance student loans because the payments are way too large for their income. If you can pay on student loans as soon as they are due, make your payments plus an additional to principle balance, so the loans are paid off quickly.
At the same time, of course, remember to place a monthly payment in your savings account for a rainy day. The best student loans, as I have said, are government subsidized loans since you don’t have to pay interest while you are in school.
The best refinancing options are also government refinancing programs. If you refinance with private companies, you could lose the loan benefits you get with government programs. One such benefit is loan deferral if you return to school, a hidden higher interest rate can be found in private loans or tax benefits of interest deductions in government loans.
If You Pay Off Your Student Loans Early
If you pay off your student loans early or on time you will have a peace of mind you never thought attainable. That is how I and many of my friends felt when our student loans were paid off. When I graduated from dental school and my student loans became due before I got a job, I felt I would be in this debt box forever.
Knowing I had a large student loan balance every month when I made my payments, it always gave me a sinking feeling. When I graduated there
When I graduated from graduate school there were no government loan repayment programs and my financial aid was only student loans. The Income Based Repayment Plans and the non-profit service plans, were recently put in place by the Obama Administration.
I knew if I did not make my loan payments, even when I had no job, the loans could balloon out of control if I got sick or experienced long-term unemployment. I spent a lot of time figuring out how to get out of this box of miserable student loan debt.
Avoiding Financial Aid Mistakes Requires Research
I finally came up with the solutions that I am sharing with you in this article on student loans and my previous two articles. The solutions start way before you start college, but it is never too late to figure out how to pay off student loans and maintain your credit rating. It begins with understanding financial aid for college and all options that surround it.
College Without Student Loans
Choosing a College
The top colleges and universities recommended by major publications; most American students can’t afford. There for you must consider several factors when choosing a college, to make the best choice possible.
Several national magazines publish the top colleges and universities in the U.S. yearly. All of the top colleges listed have one thing in common, extreme high cost. Because the cost are so high, most Americans cannot afford to attend these so-called “top colleges” unless they acquire an uncontrollable school loan debt or a full 4 year scholarship. My number one consideration for choosing a top college or university, and what should be your number one
consideration, is simply put, cost. Not considering cost, can cost you misery later in life, for years to come.
If a poor or middle-income student choose one of the “top colleges”, their school loan balance after graduation would be outrages. Because, even after amortizing it over 20 years, the monthly payment would not be possible with the vast majority of entry level jobs in the U.S. You read that right, I said 20 years. Many students find that they have to amortize their school loans over 20 years to get a somewhat manageable payment option. Many graduates have payments more like mortgages than school loan payments, but this does not have to be the case.
Furthermore, if one of these students choose to defer school loans for graduate school, their existing outrageous balance could easily double. Interest payments are charged to the balance of the account even if the loan is in deferral.
If the school does not have a reasonable and affordable cost for your income, don’t even think about attending, unless you can get a full scholarship. Keeping a full scholarship usually requires you maintain a B+ grade point average.
Why burden yourself or your child with debt you or they can’t repay? The burden would be so high their life would be miserable trying to make the monthly payment. Figuring out the cost of a college includes a detailed analysis of tuition(for in-state and out of state residents), room and board, books, registration fees, plane fair or auto expense to get to and from school 3 times a year. Add an extra 2% to that total to cover hidden cost. Some students who choose schools they cannot afford, graduate with a college degree only to find their credit score fizzles so low they are no longer a candidate for employment, as a result of non-payment of school loans.
Most financial aide packages include a combination of large school loans, small grants, work study, and parents or students contribution. The financial aide package usually includes only about 70-80% of total cost for the poorest students, unless you are lucky enough to get one of the rare full scholarships.
Choosing a college without the consideration of debt can cause you and your child a lifelong drama of financial misery and unbearable stress. Don’t burden yourself with unsustainable debt and a low credit score, to get a college education.
Is the culture conducive to your upbringing? If not, can you assimilate into the culture? The culture includes kids from similar communities, things to do that you enjoy, your religious facilities to attend, and acclimating to severe weather you are not used too. Some straight A
students attend colleges that are so culturally different to their upbringing that they have a difficult time adjusting, hence, their grades suffer as a result.
3. Academic Standing
Is the school certified by the local, state and federal academic boards?
4. Major Fields
Does the school have a large variety of major fields, so you can choose a second or third choice if you discover you don’t like your first choice?
5. Type of School
Understand the different types of schools available. Is your school choice an in-state public college, a private college, or a for-profit college?
The best value for your education is an in-state public college. Public schools are subsidized by taxpayers dollars so children within the state can get a quality education at an affordable cost.
Private colleges and universities are usually owned by organizations and churches. For-profit colleges and universities are usually owned by corporations. Both of these choices can be outrageously expensive with a lot of hidden cost. Do your research well before you consider a college or university. Understand that most colleges have tuition increases each year, this must be figured into the ongoing yearly cost. Because school cost is being subsidized with school loans for many students, getting the lowest loan amount it imperative. Your income right out of college is not guaranteed, neither is a job. Because of this it is wise to focus on low or no school loan debt for college or trade school. The debt must be repaid, the lower your debt the better your chance of repaying your debt easily and on time.
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