This presentation covers 11 essential things that parents and students need to know about studen loans including why federal loans are forever, the difference between direct federal loans and Perkins loans and why your child may not qualify for a subsidized federal loan,
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11 Things Every Parent (And Child) Needs To Know About College Loans
1. Helpful Financial Information from National Debt Relief …
11 Things Every Parent
(And Student) Needs To
Know About College
Loans
There you are the proud parent of a son or daughter
who’s been accepted to college and is all excited at
the prospect of beginning a new phase in his or her
life. Or maybe you’re the son or daughter yourself
and you just can’t wait for August to roll around.
But have you all calculated what it’s going to cost
for four years of college and exactly how you’re
going to pay for it.. (Continued …)
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The
2. Helpful Financial Information from National Debt Relief …
1. Get Your FAFSA in early
The first thing you need to know is that it's critical to get your Free Application for Federal
Student Aid or FAFSA in as early as possible. If you are counting on student aid you should
have already submitted it to the federal government as well as to the school or schools you child
chose. The reason for this is because most colleges offer financial aid on a first-come, first-
served basis. Schools have a limited amount of funds and once they've distributed them, that's it.
No matter how worthy your child might be, if you get your FAFSA in late, he or she could miss
out on getting any aid at all – outside of a federal or private loan.
2. Understand the different types of federal loan available
There are three types of federal loans available. The first is a Federal Direct Loan. The second is
a Federal Perkins Loan. And the third is a PLUS loan. A Federal Direct loan comes directly from
the federal government (the Department of Education.) A Perkins Loan comes from the college
or university of your child's choice and is needs based but subsidized by the federal government.
And finally, a PLUS loan also comes from the federal government but it could be your loan and
not your child's.
3. Learn how much your child can borrow
If your child is dependent on you and is a first-year undergraduate student he or she can borrow
up to a maximum of $5500. The limit for a second year undergraduate student is $6500 and for
third year students and beyond, the maximum is $7500. There are other maximum limits for
independent students and graduate students and you can learn them by clicking here.
4. You may get a Financial Aid Shopping Sheet
If you're lucky, your child's school will provide you with a Financial Aid Shopping Sheet. This is
a relatively new form that will give you a good idea of the school's net price. It's the cost of
attendance – room, board, tuition, books etc. minus grants, scholarships, work-study and loans.
You might think of this document as the school's discounted sticker price. Unfortunately, about
two thirds of all colleges don't make your net price very easy to understand. In fact, you may
have to contact the school's department of student aid to learn exactly what his or her college will
cost.
5. You will need to submit a new FAFSA every year.
Like it or not, you will be required to fill out and submit a new FAFSA every year. The
government and your child's school will then once again determine the amount of aid he or she
will receive.
3. Helpful Financial Information from National Debt Relief …
6. Watch out for the term “renewable”
If your child does receive financial aid from his or her school, be sure to watch out for the term
"renewal." What this means is that the aid is subject to being renewed every year. Many people
have gotten excited when they learned their child had received $5000 in student aid only to later
discover that it was for just one year and that it's renewal will be contingent on the child's grades.
7. Know the difference between subsidized and unsubsidized loans
There are two types of Federal Direct Loans -- subsidized and unsubsidized. Loans that are
subsidized are those where the federal government pays the interest charges so long as you or your
child is in school. These loans are needs based meaning that you must prove you have a financial
need. Unsubsidized loans are ones where you pay interest while in school but there are no
eligibility requirements. If you get a subsidized loan, the school will determine how much you can
borrow, Also, subsidized Direct Loans are available only to undergraduates that are in school at
least half time.
8. Understand Direct PLUS Loans
To be eligible for a a PLUS loan you must be a graduate or professional degree student and
enrolled at least half-time at an eligible school in a program that would lead you to receiving a
degree or certificate. Or you could be the parent (biological, adoptive, or in some cases,
stepparent) of a dependent undergraduate student that's enrolled at least half time at a
participating school. Note: if you take out a Direct PLUS Loan in your name, you cannot transfer
it to your child at some future date. If the loan is in your own name, it's yours and you will be
required to repay it.
9. A federal student loan is like forever
It used to be said that there were two things in life that were constants – death and taxes. Today,
you could add a third to this, which would be student loans. They are unlike any other form of
loan in that they cannot be discharged by a bankruptcy (except in very special circumstances).
Once your child takes out a student loan, he or she will be required to pay it off in full. Period.
There are some very limited ways to get a federal student loan deferred, canceled or forgiven but
generally speaking once the funds from a federal loan have been disbursed, you or your child
will be on the hook for repayment. And the federal government is not at all forgiving. If your
child's loan goes into default, he or she could end up having their wages garnished or could fall
into the clutches of one of those awful debt collectors.
4. Helpful Financial Information from National Debt Relief …
10. There are tax benefits
The good news about student loans is that they do come with some tax benefits. For instance,
there are two income tax credits that can help offset the cost of your child’s education. The
American Opportunity Credit would allow you to claim up to $2500 per student per year for the
first four years of school as your child works towards a degree or similar credential. Second there
is the Lifetime Learning Credit that allows you to claim up to $2000 per student per year for any
college or career school.
If you took out student loans for yourself, your spouse or your dependent, you can take a tax
deduction for the interest that you paid on it. This applies to all loans (not just federal student
loans) that are used to pay for higher education expenses. The maximum deduction is capped at
$2500 a year.
11. There are two ways to save for your child’s education
While it may be too late for this there are two ways to save for your child's education that have
positive tax benefits. The first of these is the Coverdell Education Savings Account that allows
you to save as much as $2000 a year for your child's educational expenses. Second, most states
offer Qualified Tuition Programs (also known as 529 plans. This would allow you to either
prepay or save up to pay for your child's education-related expenses. Then when your child is in
school and you begin withdrawing money from your account to pay for his or her expenses, it
won’t be taxed.
If you are having trouble with your student loans, National Debt Relief has a program that can
provide you with consultation services. Their trained experts can advise you about you student
loan repayment options based on the type of debt that you have and your employment situation.
They will even help you with the paper work involved. This service has a one time fee that will
be placed in an escrow account. When you are satisfied with the service and the documentations
done on your behalf, that is the only time the fee can be released. There is no upfront or recurring
maintenance fee.
5. Helpful Financial Information from National Debt Relief …
Does this sound familiar?
• You are tired of worrying about money…
• You are losing sleep due to mounting credit card debt…
• You are fighting with your partner about the bills…
• You are living paycheck to paycheck…
• You are falling behind on your debts…
• You are losing hope…
It’s time to talk with National Debt Relief!
Go to
http://www.nationaldebtrelief.com/free-student-loans-
quote-now/?src=PDFs
Or Call
1-888-275-4499