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There is nothing wrong with pulling out student loans, however there are a few things you should consider and plan for before you do so.
Students that complete a FAFSA form will receive either a subsidized or unsubsidized loan offer. Only dependent students can be eligible for Parent Plus loans. Also, any student who drops below 6 credits is not considered by the servicer to be enrolled in school, and any time spent below 6 credits will begin to count towards a student's grace period.
Loans are borrowed money and must be paid back. There is nothing wrong with pulling out student loans, however, there are a few things you should consider and plan for before you do so. You will want to know the answers to these questions:
Before a student takes out a loan for the first time, they are required to finish Entrance Counseling, this walks the student through loan policies and helps educate them on these types of questions.
For information about how to get a student loan, completing MPN, completing Entrance Counseling, paying back loans, and other useful information visit the following websites.
Did you know…? The national average student debt is $27,000 by the time a student graduates.
Not everyone wants to take out a loan, but sometimes it is necessary. Planning ahead will help you know how much you might need to take out and ultimately minimize your overall student debt.
All student loans have an origination fee. This is explained in your MPN and Entrance Counseling. This fee is simply taken out of the loan funds that you accept, so the money that you receive will be less than the funds that you accept. Interest is the cost of borrowing money. Interest accrues on all Direct Unsubsidized loans and Parent Plus Loans while a student is going to school. You can figure out how much you will end up repaying by using an Interest calculator.
Have you already pulled out a student loan? Check your account and with your servicer to see where you currently stand with you loans. The church offers a Debt-Elimination Calendar found in “One for the Money: A Guide to Family Finance” (page 12) that can help you make a plan to pay off or reduce your debt. It is never too early to begin repaying your student loans.
Students are required to begin paying back their loans once they drop below 6 credits for 6 months. These 6 months are called a “Grace Period”. If you use up your grace period and return to school, you are not required to pay while you are enrolled, but you no longer have a grace period once you fall below the 6-credit level again.
The most essential thing that you can do before taking out a loan is making a plan first. If you plan ahead and know what your resources and expenses are, you will know ahead of time how much you need to pull out in student loans rather than not knowing and taking out more than you need.