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:
- What will be the total amount you will need to borrow for your entire education?
- What are the costs, including interest, to repay the loan?
- What will the monthly payments be and when do I need to start repaying them?
- What penalties are associated with my loan in different circumstances?
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.
- Fact: Student loans may be the only option for a student to pay for a college education
2. Students are required to take out the whole loan amount offered
- Fact: When you accept your student loan, you may choose how much of the award you accept
3. It is better to take out the loan that has the lowest award amount
- Fact: Unsubsidized loans can be a smaller loan amount, but interest accrues on the funds taken out while a student is going to school. If you do not need a lot of loan funds, accept a portion of the subsidized loan to avoid accruing interest.
4. Only full-time students (12 credits) can receive loans
- Fact: Students can receive loan funds if enrolled in less than 12 credits. They must be enrolled in at least 6 credits to receive any student loans. Student enrolled in 6-11 credits will have their award amount prorated according to the amount of credits they are taking. Students need to let their financial aid counselor know their credit level will be different.
5. You have to pay off your student loan before you go on your mission
- Fact: A student does not have to have all of their student loans paid off before going on a mission. However, because you will be out of school for more than 6 months, your servicer will start to bill you. You are responsible for contacting your servicer to see what your options are while you are on your mission.
6. I don't have to pay back my loans until after I graduate so I don't' need to worry about what I have pulled out until then
- Fact: Students are not required to pay back their student loans until they have dropped below 6 credits for more than 6 months. However, unsubsidized loans will accrue interest while a student is in school. Students are also responsible to be aware and keep track of the interest that will accrue. Click here for more information.
7. Loan money can only be used on tuition
- Fact: Scholarships, Pell grants, student loans and other forms of financial aid used at BYU-Idaho will automatically go towards tuition and any other debts to the school first. Anything left over is yours to use responsibly for any other school expenses that you may have.
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.