Tuesday, October 17th, 2017

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Financial Security at a Cost

(U-WIRE) TALLAHASSEE, Fla. – With all the stress that comes hand in hand with attending college, some university students wish they could have the freedom to not worry about money. In these college years, the first away from their parents’ bulging back pocket, many students find out how crushing the weight of financial responsibility is.

The cost of tuition, fees, supplies, and room and board add up to be a monthly payment of mass proportions. Add to it beer tabs and the occasional road trip and that bill becomes too much for most students. Many students are supported by their parents, some get scholarships and grants; others find it easy to balance their budget by working and attending school at the same time.

For those without these benefits, paying for college and all that comes with it can sometimes become more stressful than college itself. Their option is clear — work as often as they can, sacrificing social life and school work to make ends meet or take out interest-bearing loans on their parents’ credit or their own.

When considering signing a loan, it is important to weigh all the options. A sizeable loan can result in yet another monthly payment; however, it may also make it easier to pay rent and utility bills and buy food.

Upon graduating, that sizeable loan can still be just as sizeable and may take many years to fully pay off; depending on the salary each student expects to pull upon graduation. The prospect can be as intimidating as their empty wallets; what shall it be, money now and debt later or no money now and an empty stomach- but a debt free future?

The details on loans available to students can help clear up any fears or make them more apparent.

Any student interested in receiving them must have submitted a Free Application for Federal Student Aid (FAFSA), and those looking to inquire about loans and other sources of financial aid for next year are strongly encouraged to turn in their FAFSA as soon after the opening date as possible.

The sooner the forms are processed, the more aid is available to be disbursed. Four basic loans are available to students. They are the Federal Stafford Loan — both subsidized and unsubsidized, — the Federal Perkins Loan and the Federal Loan for Parents or FPLUS Loan.

The Federal Perkins Loan has the best benefits of those previously listed. It has low interest rate of 5 percent and can be as large as $4,000 for students who are deemed financially eligible. They key factor for the strength of this loan is the fact that the government will pay all interest that accrues during active full-time enrollment in college.

More common than the Perkins loan is the Federal Stafford Loan. It has two versions, the subsidized and the unsubsidized. The subsidized implies that the government is willing to pay all interest on the loan until the student graduates college.

Upon leaving college, there is a six-month grace period wherein the government will still pick up the interest tab, thus allowing the student to get their feet on the ground before the bills start rolling in. The unsubsidized Federal Stafford Loan has interest that accrues during college.

However, the interest rate is fairly low, making this option a tempting offer. Students have the option of paying the interest while in college, thereby making their bills upon leaving much smaller, or deferring the interest until graduation. Unfortunately with this option, the interest capitalizes as it is deferred, or is added to the total amount of the loan. This results in larger payments in the end.

The final option for many students seeking loans is the PLUS loan, a loan which is dependent on the student’s parents. It is not based on need and can be used to cover up to the full cost of tuition, if approved. Interest is very low for this loan, also; last year it was merely 4.86 percent.

Unfortunately, repayment on this loan begins 60 days after its final disbursal, meaning more bills, but smaller ones. Applications for these loans can be completed online.

When looking at the interest rates for many of these loans, it sounds like a low cost option. However, when loan balances are in the ten thousands, the amount of interest becomes increasingly large.

The prospect of having money to burn is enticing. However, students must also realize the impending debt that awaits them upon graduating college. They must decide personally whether having little money now is more or less stressful than having lots of debt later.

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