The struggle of understanding student loans

According to an article written in National Journal, Americans owe nearly 1.2 trillion dollars in student loans, and the number keeps rising every year.

With rising costs in tuition, financial assistance has almost become a must rather than a friendly option.

Whether a first-time student at JSU or a senior preparing to graduate, the odds are financial aid has helped in some way or another.

According to the JSU website, 83% percent of students attending JSU have received some form of financial aid. That’s a lot of people.

Yet despite the rigorous methods the Financial Aid department takes in informing each student about his/her student loans taken out each year and when they must be paid back, there is still some confusion as to what exactly are student loans.

Student loans are essentially borrowed money from the federal government or private institutions such as banks that must be paid back with interest.

According to the JSU website, there are four main types of student loans offered here at JSU: Direct Stafford Subsidized Loans, Direct Stafford Unsubsidized Loans, Federal Parent PLUS Loans and Federal Graduate PLUS loans.

Stafford Subsidized loans provide low interest rates and are available to students with financial need based on income and other information provided on FAFSA.

No credit check is required, and the government pays the interest on these loans until six months after the student is no longer enrolled in the college at least half-time.

Stafford Unsubsidized loans also provide low interest rates but are available to all students regardless of financial need. The students are responsible for the interest with subsidized loans and can either pay the interest during college or have it accumulate and added to the principal balance which then must be paid six months after the student is no longer enrolled at least half-time.

Other important loans are the Federal Parent PLUS Loan and the Federal Graduate PLUS loan.

Both of these loans are low interest but require a credit check or an eligible co-signer.

The Parent PLUS loan allows the parent to take out a loan on behalf of the student, and the Graduate PLUS loan allows graduate students to gain financial assistance in order to finish school.

Both of these loans must begin repayment after the final disbursement of aid for the year, only in the case of the Graduate PLUS loan is the student allowed to put off repayment until after school, although interest will continue to accumulate.

For more information on private loans, ask one of the local banks and they can assist on the varying interest rates and requirements of taking out a private student loan.

Successful repayment of student loans can help create a strong credit history, as well as financial stability for the future.

Nathan Cavitt
Staff Reporter

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