How much can a student going into a college loan money?
Friday, June 4th, 2010 at
5:12 am
jh_kim0319 asked:
I need to borrow money from private investors or the government to pay off about half of my tuition per year, (like 20,000 a year)
Can I actually borrow that much money as a student?
I need to borrow money from private investors or the government to pay off about half of my tuition per year, (like 20,000 a year)
Can I actually borrow that much money as a student?
Tagged with: College Loan • College Money • Need Money
Filed under: Student Loans
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Last year, the Stafford loan limit for 1st year undergraduates was $3500 for dependent students and $7500 for independent students (married, over age 23, if you have children, etc.)
Those maximum figures go up to $4500 and $8500 in year two, and $5500/$10,500 in years three, four and five.
The maximum total amount that a student can borrow in Stafford loans is $23,000 for dependent students or $46,000 for independent students.
There are parent loans, called PLUS (parent loans for undergraduate students), that your parents can take out to cover any costs not covered by your financial aid package. Interestingly, if it appears that your parents would not qualify for a PLUS loan, the Federal government allows eligibility for a higher annual Stafford loan to you.
There are any number of other forms of financial aid that you may qualify for. If you completed a FAFSA and submitted it by your school’s deadline, the financial aid office will estimate your financial “need”, and send you a financial aid letter that details the various kinds of assistance that you qualify for. Some of that aid may come in the form of loans, while other money might be available in the form of grants or scholarships.
Most schools attempt to cover 100% of every student’s “need” – though most of that aid may come in the form of loans.
Once you have that letter from financial aid, you will know how much more you and your family will need to cover. At that point, the financial aid office should be able to assist you in identifying the best sources for alternative aid. Be very careful about some of the private educational lending that you’ll encounter – not all of those programs are legitimate.
Keep this in mind – student lending is normally a risky enterprise for lenders, because very few 17 and 18-year olds have an established credit history. Government-backed loans, like Staffords are the rare exception – these are readily available loans, offered at low interest rates – specifically because the government has guaranteed to pay off those student loans if the student is unwilling or unable to pay. Private loans do not come with government guarantees, so the lenders charge high interest and high fees to make up for the high risk that underlies those loans.
Before borrowing from an alternative educational loan source, I would strongly recommend that you have all of the paperwork and figures reviewed by a knowledgeable financial advisor.
Good luck to you!