While in college, every student has to consider different options when it comes to paying for school. There are different forms of financial assistance for those who fill out the Free Application for Federal Student Aid (FAFSA) form and submit that.
“Financial aid is here. Unfortunately, if you don’t qualify for grants, loans are an option; loans are financial aid,” said Sylvia Perez-Jaquez, DMC financial aid representative.
“The good thing about federal loans is that the interest rates are lower and fixed,” Perez-Jaquez said.
Loans are a smart alternative for some according to Perez-Jaquez, and there are two types of student loans offered through financial aid: subsidized and unsubsidized.
Subsidized student loans are federal loans that the government pays the interest on while the student is in school.
The government continues to pay the interest for the student even if he or she enters a period of loan deferment or during the six-month grace period after graduation.
Interest rates on loans can be high and a subsidized loan takes the extra interest the student would pay with a standard loan off the loan amount.
Subsidized loans, according to collegescholarships.org, are loans designed for low-income students, and the most popular of these loans is the Subsidized Stafford Loan.
A subsidized loan is a loan students who must take out loans should try to qualify for because the government determines the interest rate and that can help the student with the total amount when it comes to repaying the loan after graduation.
Once the six-month grace period is over and payments are due for the loan, the principle and interest are then taken over by the borrower/student and payments begin.
The other type of loan is an unsubsidized loan, a federal loan that the student must pay interest on. A good thing about this loan is that no matter what your income, almost anyone can qualify.
Unsubsidized Loans such as the Stafford and or Perkins have specific requirements that student must meet. Students must comply with the guidelines for Satisfactory Academic Progress (SAP), meaning maintaining a good GPA and they must be enrolled in six or more credit hours per semester.
The current interest rate on the unsubsidized loan is 6.8%, and the borrower must pay interest immediately, even while still in school.
Once the student graduates, there is a six-month grace period to begin figuring out how to pay back the loan.
According to collegescholarships.org, there are four different payment options in repaying an unsubsidized loan.Standard option – a fixed monthly payment for 10 years. Extended option – allows a standard or graduated monthly payment for up to 25 years.Graduated option – payments amounts begin small but gradually increase. Income-sensitive option – the monthly payments are relative to the payer’s current income level.
In some cases, subsidized or unsubsidized loans may not be enough, so students can investigate the possibility of private loans.
According to the DMC Financial Aid website, private loans are offered by lending institutions and are not part of the government’s guaranteed loans. Student may apply for these loans at banks and must make sure that the school certifies the loan from the private lender or bank.
Students should research their options when it comes to paying for school.
“Loans are a good investment to education, but you can get yourself into debt if you don’t borrow wisely,” said Perez-Jaquez.
The staff of the Financial Aid Offices on both DMC campuses can assist students with any questions they may have on loans and with all financial aid forms.
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