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180 Student Loan Payments to Go!Mar 16 '00 Write an essay on this topic.Let me first admit I was a major idiot when I first went to college. My parents offered to pay for my school but I chose to be, shall we say...."social"? I didn't go to classes and I didn't study. A year and a half later I was told that if I wanted to go back to college I'd be paying for it myself. After working out there in the real world (and deciding that being a pizza delivery person wasn't a profitable profession) I decided to go back to school. I had heard that all you would need to do is fill out a FAFSA financial aid form and you would be assured enough money to be able to pay for classes and for living expenses. You hear about SGL's, Pell Grants, EOG's, etc (so many acronyms out there). How many people truly pay attention to what each loan or grant is and the stipulations involved? I remember being handed my acceptance sheet during registration...I really didn't know what I was signing, to be honest. I accepted everything that was offered to me and was pleased to have enough money to go back to college. Each year, the same thing happened. After 5 years of school (a dual major...not being lazy) I graduated owing 19,000 dollars in school loans but I thought... hey, I have a real job where I can afford to pay back my loans. Having a job in general that paid more than minimum wage was appealing but I soon discovered that a 19,000 salary in San Antonio didn't go very far. I had to work a second job. After my six months grace period the repayment requests started hitting. What have I learned about taking out loans? 1. Be careful what you sign for. One thing I didn't look at was that I had unsubsidized and subsidized loans-I was accumulating interest I had no idea about (still in my idiot stage). The government doesn't charge you interest on the subsidized loans during deferments or forbearances. 2. Some loans can be waived if you fill out the proper paperwork. Depending on your occupation and whether or not you work in a shortage/low socioeconomic area, you might be able to have the loan paid off within six years. What typically happens is you fill out the application each year and after working the job for a year 15% of the loan is waived. Each year a certain percentage is waived until the loan is paid in full. If you fill out your paperwork each year you should be fine. A word of warning...you will have to be proactive about this...the necessary paperwork isn't voluntarily sent to you. If you forget about it and find out you are past due on payments, you can lose this privilege and be expected to pay back the remainder. 3. You also need to be careful about who your lender is each year you take out the loans. If you don't have the same lender, you can end up being expected to pay more than one loan payment per month. I had a loan that was purchased out by an organization in Nebraska and I had no idea!How do you solve this? Consolidate your loans. Find a loan corporation that can help you. Your local financial aid office can provide you with names of lending institutions or you can call the Department of Education. 4. If you get one of those little offers in the mail from your lending company saying they will give you a month or two for a forbearance during the holidays, don't take them up on the offer. Why? The interest you will end up paying back is more than the actual payment. Sometimes they expect you to pay that up front if you don't choose to have it tacked on to the principal. Getting your statement with triple the amount of your standard payment IS a shock to the system. 5. If you should end up being one of those "lucky" individuals who ends up in default, don't fear...there is help available. The Department of Education has a loan origination center and they can buy out all of your loans and consolidate them at a reasonable interest rate. The also have an income contingent program. The Dept. of Ed will look at your financial resources and help you out with a lower payment until you become more financially secure. These are a few of the key factors you should consider if you decide to assume the responsibilities involved in taking out student loans. From what I understand, more and more universities are making it a requirement that students take a class regarding these responsibilities before allowing them to accept the loans. If you choose to be foolish and end up in default, you are guaranteed financial problems later.  |
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