When a person decides to continue their education after high school, one of the most important questions they need to ask their self is how they will finance this pursuit of a higher education. While it is possible for returning students to pay for higher education with cash it is highly improbable. There are two main ways in which a returning student can finance their higher education that being with grants and student loans. Stafford loansFederal Stafford loans are fixed rate student loans for undergraduate and graduate students attending college at least half-time. Subsidized Stafford loans cover up to $8,500 a year for graduate school, or $65,000 total. You don't have to repay them until six months after graduation, and there are a lot of repayment options - up to 25 years if the loan is over $30,000. Unsubsidized Stafford loans cover up to $18,500 a year for graduate school, or $138,500 total. You don't repay them until six months after graduation, and if the loan is more than $30,000, you can take up to 25 years to pay it back.
PLUS loans cover costs that aren't covered by other sources of financial aid. You have to start repaying them two months after receiving the loan. But, like the Stafford loans, you can take up to 25 years to repay in full if it is over $30,000.
Interest rate is 5%The Federal Perkins loan is for $6,000 a year or $40,000 total. You don't have to start repayment until nine months after graduation, and you have 10 years to repay in full.
Institutional GrantsAt private universities, institutional grants typically form a large portion of a student's financial aid package. This is money a student is given by the university to offset the cost of attendance, and it does not need to be paid back. The amount of an institutional grant is determined by your financial need. Institutional grants are usually used after all your loans, federal grants, scholarships and savings have been applied and there is still a balance on your tuition bill. At a private, well-endowed university, a student whose family is unable to contribute any money toward college expenses may be awarded $20,000 or more in institutional grants per year.Federal GrantsThe federal government offers several higher education grants. Among these, the most popular is the Pell Grant. Pell Grant money is given by the federal government but usually apportioned by your school's financial aid office. In the 2008-2009 school year, the maximum Pell grant award was $4,731. Another popular federal grant is the Federal Supplemental Educational Opportunity Grant (FSEOG). This award (up to $4,000 per year) is given to students with exceptional financial need and who already qualify for Pell Grants. Federal grants, like institutional grants, do not need to be repaid.Other GrantsThere are loads of need-based grants that are typically given out on the basis of where you live, your race or ethnicity and what you plan to study. These grants, unlike institutional and federal grants, will not be given to you as part of the financial aid application process; you'll have to seek them out. Consult the Resources section for websites with directories of scholarships and grants.How Do I Get a Grant?Almost all students applying for financial aid are required to fill out the Free Application for Federal Student Aid (FAFSA). This form, administered by the federal government, is used to calculate your eligibility for federal aid (including Pell Grants FSEOGs and also federal loans). But the form is used by your university not only to calculate your federal aid eligibility but also to determine what institutional grants and scholarships you're eligible for. Because of its importance, take extra care to file it by the deadline. See Resources for a link to the FAFSA's website.Types of College Grants | eHow.com http://www.ehow.com/about_4778086_types-college-grants.html#ixzz1cQB2HRhS
Everything that involves consumer credit is based on how good your credit is. If your credit is bad you will have to give a deposit in order to get consumer credit and you will also have higher interest rates. If you have good credit you will have lower interest rates and payments.Fixed interest rates are rates that stay the same throughout the life of the loan. The most common loans with fixed rates are car loans, student loans, and home loans.Variable interest rates vary and can go up or down depending on the prime rate. The prime rate is the rate banks charge their preferred customers. Interest rates on credit cards and home equity loans can be either fixed or variable.
There are a lot of ways to avoid debt, but you just have to be willing to follow the plan that best fits your situation. This is a list of some of the things I think you can do to avoid getting into debt. Create a budget plan designating the appropriate amount of money for your fixed expenses such as car payments, mortgage payment, rent, etc. and then estimate how much money you will need for other expenses such as clothing and entertainment. This way you will less likely to overspend.Pay cash for normal expenses like your groceries, cable, phone, and gas and electric bill. Do not pay for these items with credit that will only increase your debt. Paying cash also allows the person to see where the money is going and how it is been spent.Most of the time spending money on things you do not need is done on impulse. This kind of spending can lead to overspending. Before you buy items ask yourself this questions.Do I need this item or is it a want?Can I afford this item at the current time?Will buying this item force me into further debt?Do not spend more money then what you are bringing in. Do not try purchasing material things just because your friends have them. Creating an Emergency fund can help you survive a major financial crisis. Recommendations for emergency funds are to have six months worth of living expenses saved up. Do not depend on credit cards or line of credit as an emergency fund that will only get you in more debt.Try to have one or two credit cards, more than that can be hard to keep track off payment dates and amounts owed. Always pay off your credit cards at the end of the month. Also remember to pay on time.
Getting in debt is easier then getting out of debt. But once you are in debt there are several things you can do to manage your debt. Develop a budget with your necessities and debt payments and then you can add expenditures until you run out of cash. This means that you will pay bills and your debt before you can consider using money for entertainment and clothes shopping.Contact your creditors immediately when you know you are not going to be able to make your payments. Tell them why its hard for you to make payments, and try to work out a payments plan that is manageable to you.If cannot create a budget that you can stick to, cannot work out a new repayment plan, or your are not organize and cannot keep track of your bills, the you should contact a credit counseling organization. They can help you develop a budget, plan for debt reduction, and negotiate with your creditors.A debt consolidation loan is a loan for repayment of higher interest debt. It is best to get the shortest loan that you can afford to pay. If you decide in a debt consolidation loan you must remember not to run up your credit cards again. You will not be able to make the payments on the new loan and on the new debt.If everything fails you have one more option that option is bankruptcy. Bankruptcy is the legal right to ask the court of law to get rid of certain debts and obligations. Bankruptcy stay on your credit report for ten years and can make it hard for you to get new credit.
Managing Your Personal Finances 101
Managing Your Personal Finances 101 Facilitators: Ben Flores and Daniel Pringle
Agenda• Comparing Student Loan Options – Stafford Loans • Subsidized • Unsubsidized – PLUS Loans • Parent PLUS Loan • Graduate and – Federal Perkins Loan – Grants• Interest Rates – Fixed – Variable• Avoiding Debt – Techniques to Avoid Debt
Stafford LoansSubsidized Unsubsidized• Lower interest • Higher interest rate rate• Interest does not • Interest accrues accrue during during school school • 6 month grace• 6 month grace to to start repay start repay after after graduation graduation • Covers up to• Covers up to $18,500 per $8,500 per year year or or $65,000 total $138,500 total *For additional information visit www.StaffordLoan.com
PLUS LoansFederal ParentPLUS Loan Direct PLUS Loans• For Parents of • For Graduates and undergraduates Professional Degree Students• 1st payment due 60 • 1st payment due 60 days after days after final final disbursement disbursement • The maximum allowed is the• The maximum amount of attendance minus allowed is the amount any other financial assistance of attendance minus received any other financial assistance received *For additional information visit www.studentaid.ed.gov
Federal Perkins Loan• Low interest Federal student loan• School is the lender, however the loan is made with government funds• Repayment does not begin until 9 months after graduation• Maximum loan amount is $6000 per year, or $40,000 total• 10 years to have loan paid in full
Grants• Funds that do not have to be paid back• Student need only to apply and be approved• Typically provided to students based upon a financial need Types of Grants: Institutional Grants Federal Grants Other Grants
Avoiding Debt• Create a budget plan• Pay cash for normal expenses• Stop buying unnecessary items you do not need• Live within your means• Create an “EMERGENCY” fund• Stop getting credit cards
Managing Debt• Self-help – Develop a budget – Contacting your creditors – Credit counseling• Debt consolidation• Bankruptcy
Summary• Student loans are a great way to help pay for your higher education, as with all loans however you should always borrow carefully.• Grants are also a great resource to help pay for schooling, unlike student loans grants do not have to be paid back.• Interest rates can vary based upon an individual’s credit score. Interest rates can be high or low, and can be either fixed or variable.• Debt can be easily overwhelming to an individual if managed poorly. Be cautious of the debt you have and apply appropriate techniques to reduce any debt you may have.