Managing Your Financial Aid - Planning for today, and tomorrow
While student loans are readily available to most students, exercise caution before
simply signing up for the maximum loan for which you qualify. This is debt that
must eventually be repaid. Specifically:
- Check out ways to cut costs and only borrow the minimum amount you need.
- Be careful about borrowing during the first year; if you decide to discontinue school
you will still owe the debt.
- Be conscious of the total amount you will borrow by the time you graduate, the total
cost of your loan, and the monthly payments that will be required once you enter
repayment. In short, be smart about the debt you are taking on and budget your expenses
appropriately after graduation.
Student loans are nearly impossible to discharge in bankruptcy, so the student loan
choices you make today could impact you for the rest of your life.
Paying Cash for School PAYS
By making a commitment to pay a minimum of $25/month toward school, you will not
only benefit from going into less loan debt, you also will experience a significant
difference when in repayment. The only reason to borrow money now is to defer payment
until a later date – so even the smallest amount that you can pay while in school
will save you hundreds of dollars over time.
For example, based on the current Stafford interest rate of 6.8% calculated over
120 payments (standard 10-year repayment plan) here is what it would cost monthly
to borrow $10,000:
Loan Amount
$10,000
Term Monthly
120
Total Paid
$115
Total
$13,809
Total Interest
$3,809
After making a $25 per month cash payment in-school ($300/annually):
Loan Amount
$9,700
Term Monthly
120
Total Paid
$111
Total
$13,395
Total Interest
$3,695
You save $414 in total payments, including $114 in total interest paid!
Tax Benefits of Paying for College
The higher education-related tax benefits that students and parents may take advantage
of include but are not limited to:
- The student loan interest deduction, which can reduce the taxable income of many
student and parent loan borrowers based on the amount of interest paid by the borrower
or on the borrower's behalf over the tax year;
- The tuition and fees deduction, which can reduce the taxable income of taxpayers
based on college tuition and fees paid during the tax year, and
- The American Opportunity and Lifetime Learning tax credits, which allow many taxpayers
to claim a credit against their federal income taxes for college tuition and fees
paid during the tax year.
Any effort made to pay cash now and accumulate less debt will help ease excess financial
burden in the future, and you will still be accomplishing the pursuit of a degree.
We intend to help support your journey through higher education in the best way
we can. Please contact or visit the office of Student Finance to obtain answers
to any questions about how we can help you pay for college.
"How can I manage my money so I can take charge of my finances?"
"Why should I save?"
"What is a credit card?"
"What is a credit score?"