Parent PLUS Loan Features, Benefits and Drawbacks: What You Need to Know

The parent PLUS loan is a federal loan that is just one option available to parents looking to cover outstanding costs related to college attendance. Before applying for a parent PLUS loan, carefully consider its features, benefits and drawbacks.

Features of the Parent PLUS Loan

  • Availability: The parent PLUS loan is available to biological and adoptive parents, and in some cases stepparents, of undergraduate students who do not have adverse credit history. Some colleges may include the PLUS Loan in a student’s financial aid; however, just because a PLUS Loan is included does not mean that parents are required to accept it.
  • Limits: A parent can borrow up to the cost of attendance, an amount that is determined by the student’s school, minus other financial assistance received by the student.
  • Interest rate: The parent PLUS loan has a fixed interest rate, which is 7.60% for loans taken out for the 2018–2019 school year. The rate for the 2019–2020 year will be set on July 1, and it may be helpful to note that the rate for new loans has increased each of the last three years.
  • Fees: An additional loan fee is calculated as a percentage of the loan amount (currently 4.248% for disbursements on or before Sept. 30, 2019) and is deducted from each disbursement.
  • Repayment: Borrowers may choose from different plans to repay the loan over a 10-year period. Loans of more than $30,000 are eligible for an extended repayment period that allows borrowers up to 25 years to repay the loan. Repayment generally begins as soon as the loan is disbursed, but parents may request to defer repayment while the student is enrolled at least half time plus an additional six months.

Benefits of the Parent PLUS Loan

  • Pre- and overpayment: Some borrowers choose to make extra payments to pay down parent PLUS loans more quickly and to reduce the amount of interest repaid. There is no penalty for paying extra on PLUS Loans.
  • Federal repayment options: Borrowers may choose from different federal repayment plans to fit their budget, but most income-driven repayment plans are not options for parent PLUS loans. These loans also have deferment and forbearance options for borrowers who have difficulty making payments; however, interest continues to accrue daily even when payments are not required. Unpaid, accumulated interest will be capitalized, or added to the loan balance, at the end of the deferment or forbearance period.
  • Death and disability: The loan can be discharged if the parent borrower dies or becomes totally and permanently disabled. In addition, the loan can be discharged if the student dies.
  • Cancellation: If a parent applies for a PLUS Loan, he or she can cancel all or part of the amount before the loan is disbursed to the school. After disbursement, borrowers have a limited time to cancel all or part of the loan amount by contacting the school’s financial aid office.

Drawbacks of the Parent PLUS Loan

  • Discharge: Federal parent PLUS loans are rarely discharged for financial difficulties resulting from unemployment, age-related or other illnesses and injuries, or bankruptcy.
  • Nontransferable: Parents cannot transfer the PLUS loan to their student to repay after they finish school. Parents and their students may be able to work together to refinance the loan in the student’s name through a private lender; although doing so will result in the loss of federal repayment options.
  • Timing: Many parents face high education debt burdens at a time of life when earning power generally decreases and limited income is needed for living or medical expenses. Defaulting on a parent PLUS loan can lead to the garnishment of Social Security benefits, tax refunds and wages.

Other Considerations Before Taking Out a Parent PLUS Loan

The following items could be considered a drawback or a benefit, depending on personal and other circumstances.

  • Qualification: Approval for a PLUS Loan does not take into consideration a parent’s income, other outstanding debt, assets or years until retirement, so parents should carefully consider how much they can realistically repay.
  • Interest: The fixed interest rate will not increase during the life of the loan, but borrowers also won’t be able to take advantage of lower market rates in the future unless they refinance with a private lender.

Before taking on a parent PLUS loan, you should also compare it to other options, such as our College Family Loan, which is a private education loan with a cosigner option and that features lower rates than the parent PLUS loan as well as no fees.

Interested in the benefits of our College Family Loan? Check out the details here.

By: Iowa Student Loan

Plan for Total College Costs; Enter to Win

Use the free College Funding Forecaster online tool now through April 30 and enter for a chance at one of 10 $1,000 awards.

The College Funding Forecaster helps you get a clearer picture of the total costs, aid and shortfalls over four years using freshman year financial aid award information, as well as family contributions and outside scholarships and grants.

How to Use the College Funding Forecaster

Follow these simple steps to get started:

  1. Gather up your financial aid award information from the college(s) and any information about scholarships received from schools or outside organizations.
  2. Go to IowaStudentLoan.org/Forecaster.
  3. Enter in the college’s financial information as well as information about your family’s earnings and savings and any outside awards.
  4. Review year-by-year estimates and make adjustments for your own situation. For example, living off campus after sophomore year may cost less than living on campus. Or you may be expecting to earn more after the first year of college.
  5. Review the results, as well as the informational tips on how to address funding shortfalls.
  6. Enter your information at the end of the tool to be included in the drawings.

Awards for College

Iowa high school seniors and their parents and guardians can enter the giveaway for a chance at one of 10 $1,000 awards paid to the college on behalf of the winning students.

Use the tool and enter the giveaway today! 

Learn More About the Tool

By: Iowa Student Loan

Seven Tips for Summer Internships

7-Tips-Summer-Internships

Interning during college can help you prepare for the job market as you gain important skills and contacts. These tips will help you get started.

Cast a wide net

This is your opportunity to explore careers and employers, or take on a dream job, before settling down to your permanent career. Consider organizations like the FBI, Disney, MGM, Marvel Comics or the Jane Goodall Institute.

Combine two of your goals

Many college students gain a global perspective through a study abroad program. Similar work abroad programs can help you gain a new perspective on another culture as well as apply your studies in new ways. Start with your campus study abroad office to learn about reputable organizations and needed documentation or other requirements to work in another country.

Know what you want to gain

You can use an internship to define or affirm existing goals, set new ones, earn money or academic credit, meet potential contacts or mentors, gain entry to a coveted employer, or all of the above. Define your goals for your internship so you know which potential employers and workplaces to focus on.

Know what you offer

Internships, especially paid positions, can be competitive. Be prepared to treat the search and acquisition of an internship just like you would a job: prepare a resume and cover letters, interview professionally and sell your skills and enthusiasm.

Ask for help

Besides searching for internships online and through your campus career office, let family and friends, former employers and teachers, and others know you’re looking for certain types of internships. These connections can help pave the way with their acquaintances if needed.

Be flexible and reliable

Some internship providers will have set projects that will help you gain important skills, while others may not know exactly what to do with you. Be prepared to accept projects or tasks others don’t have the time or desire to complete. Use the opportunity to learn more about the inside workings of the organization, make connections and develop suggestions for improvement.

Meet the requirements for credit

You may be able to earn academic credit for an internship. Work with your campus career office or the related academic department to determine if you need to meet certain prerequisites, complete required paperwork or turn in a project or report to earn credit.

By: Iowa Student Loan

Staying on Track for College Graduation

Growing numbers of college students end up staying — and paying — beyond the traditional four years in college. While college can be one of the best times of your life, the cost of extra semesters means you should do your best to stay on track.

Here is what you can do, beginning with your freshman year, to increase your chances of graduating within four years.

1. Know your graduation requirements.

  • Colleges usually have a minimum number of credit hours required for a degree; some majors may require additional hours.
  • Know which classes count toward the degree requirements.
  • Maintain good grades to ensure you meet academic progress standards. If you fall below the minimum, you may be required to take classes that don’t count toward your degree.
  • Understand which electives outside your major you need to complete.

2. Plan out academic courses now through graduation.

  • Your college may offer an online program or paper planner to help you track progress.
  • Some required courses may entail prerequisites you need to ensure you take first.
  • Follow the recommended course plan or curriculum path for your major as a guide.
  • Know which classes are offered every term and which ones are only offered in the fall or the spring.

3. Ask for assistance early and often.

  • Meet with your academic adviser before signing up for classes and any time you need to evaluate progress.
  • Go to your professors’ office hours with questions or discussion ideas.
  • Attend tutoring sessions and meet with classmates to go over work.
  • Visit the campus career center to discuss career paths for your major and plan for resumes and interviews.

4. Focus on your goals.

  • Identify your major as early as possible.
  • Avoid taking classes that provide credit but don’t count for graduation requirements.
  • Attend every class.
  • Stay ahead of your assignments and projects.
  • Check your school email and online portal several times a week.

5. Know how special circumstances affect you.

  • If you are planning to study abroad or take on an internship or co-op, understand how that affects your course plan and timeline.
  • Summer, intersession and online courses can help you gain required credits, but be sure to know how the credits you take outside your college system transfer.
  • You may be able to test out of certain classes. Investigate these opportunities and how those credits are applied.
  • Credits are often “lost” when students transfer to different schools or change majors. Before taking these steps, work with your school to determine how they affect your graduation plan.

By: Iowa Student Loan

Before the Next Big Step: What to Do After Graduation

It may seem like everyone else has it all figured out, and you are undoubtedly tired of the question “What will you do after graduation?” But, if your plans are not yet set as the big ceremony approaches, be assured you are not the first or last to be in this situation.

Whether you’re a new high school grad who isn’t sure about college or you’ve finished a college degree but haven’t been able to land the job you want, here are some suggestions for what to do until you’re able to take the next big step:

Keep Working Toward Your Goals

Don’t let inertia or rejection take over your attitude. Continue working on ways to improve your chances of getting the job you want or being admitted to your desired college.

  • Continue to send out resumes or explore education options.
  • Work on your soft skills, like communication techniques, teamwork, initiative and creative thinking.
  • Review your resume and practice interviews with a professional.
  • Clean up social media accounts.

Volunteer

Opportunities abound to provide service to those who need it. Check out volunteer options that help you expand your horizons and suit your interests. Many volunteer opportunity and matching sites are available online, including:

  • Createthegood.org
  • Dosomething.org
  • Unitedway.org
  • Volunteer.gov
  • Volunteermatch.org

Work

You may have student loans to repay or other expenses, so consider working even if you haven’t found an ideal job. You can:

  • Work one or more part-time jobs that provide skills related to your career choice.
  • Try out a type of career you haven’t previously considered.
  • Provide freelance or consulting services in a field you have knowledge in.
  • Start your own company.
  • Teach something you have a passion for, such as yoga, skiing or beginning coding.

Take a Short-Term Position

Although many opportunities are designed strictly for current college students, you may be able to find paid or unpaid positions.

  • Find an internship related to your degree or in a completely different field you’d like to try out.
  • Apprenticeships may be available to recent college graduates and can offer a good chance to break into a specific job market.
  • Research assistantships are available in both scientific and non-scientific fields.

Travel

This may be your best opportunity to explore the country and the world, before you are committed to a full-time job, settle down with a partner and children, and have social and financial obligations that would prevent it.

  • Work abroad as a nanny, an English teacher or in another capacity.
  • Get a job on a cruise ship or train as an airline attendant.
  • Join a program like Peace Corps, Americorps, GoAbroad or World Wide Opportunities on Organic Farms.
  • Become a tourist or adventure guide.

Get a Degree

Even if you’ve already earned a college degree, you may want to continue your education if you have the funds and time.

  • Retrain in a different major or field.
  • Take continuing education classes.
  • Go back to school to get an advanced degree.

Have an Adventure

Like travel, an adventure may be best experienced while you don’t have too many other obligations. Options are limited only by your imagination and come with varying levels of risk and financial commitment.

  • Fix up a house.
  • Audition for a reality show.
  • Take a commercial fishing job.
  • Become a roadie for a band on tour.

By: Iowa Student Loan

Checklist for College Prep

With your student’s final year of high school winding down, the list of things to do may seem limitless. One way to help manage the stress and emotions of the final months before your child goes off to college is to make an organized checklist.

Here are some items to include for each month between now and the start of freshman year of college:

March

□ If your student hasn’t made a final college decision, visit or revisit those that have offered acceptance and your student is still considering.

  • Use these trips to help your student envision what it would be like to attend each school and decide if it’s a good fit.
  • You may wish to help your student set up visits to specific departments or programs or to sit in classes.

□ Compare financial aid offers from the schools that remain on the list. Your student can contact a school’s financial aid office with any questions about the aid offered.

April

□ Work with your student to make a final college selection by the end of the month, as many colleges require a commitment by May 1.

  • Your student should notify the chosen school and make any required deposits.
  • Check for specific forms or actions that need to be completed, and add deadlines to your calendar.
  • Your student should also notify other schools that he or she will not attend and send a thank-you for any special assistance or offers.

□ Help your student understand the full cost of attending college.

  • Have a family conversation about what you will and won’t help with financially.
  • Encourage your student to continue looking for scholarships that can help defray the cost of attendance. You may wish to investigate how the college will apply any outside scholarships to aid already awarded, such as whether outside scholarships would replace institutional scholarships from the college or offset student loans.

□ Help your student set reminders for requesting final transcripts.

  • The high school counseling office may have required forms or processes for this.
  • Check on whether the student needs to make a separate request for transcripts for any college courses already completed, such as dual enrollment classes.

□ Check personal IDs and documents.

  • Have your student renew his or her driver’s license or passport if necessary before going to college.
  • Consider TSA Precheck and Global Entry if your student will be flying frequently or expects to travel internationally.

□ Help your student finish strong.

  • Advanced Placement exams occur at the beginning of May. If your student is enrolled in AP classes, be sure to help them understand if a particular score is needed to obtain credit for courses at the selected college.
  • Encourage your student to try to achieve the best grades possible for second semester of senior year. Disciplinary or academic issues could result in a college rescinding acceptance or scholarships.

May

□ Review the college’s timeline for completing actions and submitting forms and deposits.

  • Your student may need to sign up for orientation to enroll in classes, select a residence hall or roommates, opt in or out of college-sponsored health insurance and take other action.
  • Work with your student to set up access to a student or parent portal offered by the college.
  • Determine whether the college requires a Family Educational Rights and Privacy Act (FERPA) agreement to provide parents with information about a student.

□ Make a four-year plan for coursework.

  • If your student has decided on a major, look for an existing flowchart or plan of required and elective classes available from the school. If none is available, look at the requirements for the major and start to plan out possibilities based on class offerings from previous years’ course catalogs.
  • Even if your student is undecided, you can look together for interesting entry-level classes, prerequisites for a particular academic college and graduation requirements to create a one- to two-year plan.

□ Plan needed transportation and accommodations.

  • Many college towns have limited hotel availability, especially on popular weekends for move-in, parent weekends, breaks and move-out.
  • Watch for deals on airfare, hotels and other accommodations and venues.

June

□ Work on life skills with your student.

  • Ensure your student can carry out the functions of everyday college life, such as waking up on time for early classes, doing laundry, arranging transportation, making appointments and preparing simple meals.
  • Discuss how your student will obtain money, such as from a job or from you, and access it for transactions. Many students use combinations of a credit or debit card, payment apps like Venmo or PayPay, cash withdrawals, and other forms of payment.

□ Encourage contact with future roommates.

  • Whether your student selected or was assigned a roommate, it can be helpful for people who will be sharing a small space for an extended time to have some preliminary conversations about preferences, habits, who is bringing what and any special needs.
  • You may want to encourage a meeting before move-in if the roommate lives nearby or can arrange to attend the same orientation session as your student.

□ Develop a network.

  • The college your child will attend may have parent associations, alumni groups or other organizations you can join.
  • Look for groups on social media, such as Facebook and Twitter. These groups can be a forum for information and support now and throughout college.

July

□ Start exploring the college community with your student.

  • You may wish to find activities to participate in for future visits.
  • Your student may want to investigate student organizations, community service opportunities, events and activities as well.

□ Shop for books and supplies.

  • As soon as the class schedule is finalized, your student can start looking for assigned books. Encourage comparison shopping between the college bookstore, other bookstores and online sites. Also compare rentals to used and new purchases, and compare downloads and ebooks to printed materials.
  • Be aware that many college courses also require an electronic access code, which may not be included with used, rented or electronic versions.
  • Determine what dorm furnishings and supplies are needed and start shopping for those.

□ Talk to your student about common college student issues and how to get help.

  • You may wish to talk about drug and alcohol use, as well as other behaviors.
  • College students often face academic issues when entering college, even if they were excellent high school students. Discuss the advantages and availability of professor office hours, study groups, teaching assistants, help centers, tutoring and other resources.
  • Mental health can often be a concern for college students as well. Most campuses offer counseling and other services; encourage your student to be aware of how to reach out.
  • Your student may have specific physical, dietary, emotional or other needs. If you are unsure about the help available, contact student services or admissions for direction.

□ Consider dorm or renters insurance for lost, damaged or stolen valuable items like laptops, cell phones, bikes and other assets. Homeowners insurance may cover some losses for your student, but an inexpensive dorm policy from a specialized provider may be an option if you have a high deductible.

August

□ Make a communication plan.

  • Sometimes it’s helpful for the parents and the student to know when they will next speak to each other after the move.
  • You may want to set up a regular time and day for a video or phone chat.

□ Get ready for the big move. Be prepared for emotions to run high as your student faces a new situation and leaving behind familiar friends and family.

By: Iowa Student Loan

4 Hot Tips for Refinancing Your Parent PLUS Loans

Well they did it — they made it to college. While your children may be busy with college classes or working at the job that college education afforded them, you may be making payments on federal PLUS Loans for parents for many more years to come.

Parent PLUS loans are pretty easy to get and many schools “packaged” these loans for parents into students’ financial aid award letters. Those conveniences come with a hidden price, though. Repayment options that may be great for some but not beneficial to others and interest rates that are often higher than financially savvy consumers deserve and that vary each academic year.

Today, education loan refinance rates are often much lower than what you may be paying for your PLUS loans.

When Should You Refinance Your Parent PLUS Loans?

Although refinancing federal parent PLUS loans may not be the right choice for everyone, here are four examples of when doing so might be the right thing for you.

1. When you want a single lower rate

Parent PLUS loans are fixed-rate loans, so the rate for the school year your child used the funds is the rate that specific loan will always be. For example, PLUS loans taken out for the 2018–2019 school year have fixed rates of 7.60%.

And because rates for new PLUS loans change every year, if you have more than one parent PLUS loan, each loan likely has a different rate. Since 2006, rates have been as low as 6.31% and as high as 8.50%.

Refinancing PLUS loans is more common than ever, and it’s easy to combine multiple loans into one new loan with one rate. And, with private lenders, the rates you are offered are based on your credit, not a number set by the federal government for everyone. The better your credit, the lower the interest rate you will be offered.

Keep in mind: Many lenders offer online tools to provide you with a rate quote or pre-qualification offer. Some companies make you create an account before getting their information, so be sure they are only making a “soft” inquiry into your credit history or that their website states the information will not impact your credit score.

Want to see what rates you would get with our refinance loan?

If you don’t qualify to refinance your parent PLUS loans with a private lender, you have the option to consolidate those federal loans through the U.S. Department of Education. If you apply for a Direct Consolidation Loan, the interest rates of your current federal loans are used to determine your new consolidation loan rate, though, so you may not see a lower overall rate. Learn more about the differences between consolidating and refinancing with our Beginner’s Guide to Student Loan Refinance.

2. When you want to lower your payment

Parent PLUS loans are owned by the federal government, and, along with being fairly easy to get, they have a basic repayment term of 10 years. The federal government offers extended repayment, up to 25 years, to borrowers who owe more than $30,000 in PLUS loans. But what if your current remaining term or the amount you owe each month doesn’t work for you?

If you are looking to lower your payments, whether it’s to save for today, help other children with college costs or plan for your retirement, refinancing can get you a longer term. Many lenders have terms ranging from 5 to 20 years with multiple options in between.

The trade-off for a longer term with a refinance loan is that you will likely pay more in interest over the life of the loan. However, reputable lenders won’t penalize you for paying extra whenever you wish, which will reduce overall interest costs. You may feel like a longer-term loan, which doesn’t require high monthly payments and allows for extra payments at any time, provides a financial safety net.

If you’d like to see how repaying at a lower rate or with a different repayment term can impact your overall costs and monthly payment, or if you want to learn more about the benefit implications of refinancing federal loans into a new private loan, check out our Beginner’s Guide to Student Loan Refinance.

Keep in mind: Refinance loans with shorter term lengths typically provide the lowest rates that you see advertised. But even loans with longer terms often have rates lower than federal PLUS loan rates.

3. When you need a change

Refinancing your existing parent PLUS loans (or any other education loans in your name) lets you reset your loan; at today’s terms and on your terms.

When you and your child were reviewing financial aid award letters and trying to understand the different types of financial aid and student loans was likely a busy, stressful time. When you first signed paperwork for those loans, you may not have had enough time to fully consider the differences between federal loans for students and PLUS loans for parents and the financial impacts of taking out parent PLUS loans.

Today is a new day, and you can find that right mix of fixed interest rates and terms to set yourself up for financial success going forward. Take time to check out your different options, and determine how different rates, payments and terms will impact your short- and long-term budgets. Without the stress of making decisions quickly to pay college bills on time, you can find the right loan for you today.

Keep in mind: The better your credit, the lower rates you will be offered for the different loan terms available. The great thing with the refinance loans offered by most lenders is that you are able to select the rate and term combination that is right for you.

4. When it’s not you, it’s them. (The servicer that is.)

Education loans are long-term financial commitments, and like all long-term commitments, your partner plays an important role. With federal parent PLUS loans, you probably didn’t pick that partner, and maybe it’s just not working out. Maybe they aren’t giving you the attention you deserve. Maybe they’re a large corporation that cares more about profits than customer service. Or maybe they are constantly trying to sell you more or different financial products.

Whatever the reason, you can get away and pick your new partner. Lenders today offer a range of benefits like rate reductions for automatic payments or for military service. Many also have policies in place to forgive loans in the event of unfortunate circumstances. Now’s your chance to take a look around and make the choice your own.

Start by learning more about us and all the details on our refinance loan.

Keep in mind: Some lenders detail their repayment benefits and policies on their websites, while you may have to call and ask others for more details. Do you want to work with a lender who is transparent and provides all the information you are seeking in the manner you prefer? If you speak with representatives on the phone, are they pleasant and helpful or do they try to get you off the phone quickly without providing the information you need?

Ready to refinance?

Regardless of your situation, if you’re considering refinancing your parent PLUS loans, it’s important to spend time weighing your options and finding the right loan and lender for you. What do you not like about your current loans? What does work now? What would be ideal in a new refinance loan?

Want to know how we can help?

Iowa Student Loan offers the Reset Refinance Loan with a rates and terms to help meet your needs. We are a nonprofit business that focuses on Iowa students and families, but we proudly provide “Iowa nice” customer service no matter where you call home. Pre-qualify today and we’ll provide you with rate and term options specific to your situation.

Get Your Rate

By: Iowa Student Loan

What Your Financial Aid Award Letter Doesn’t Tell You

The daily life of a college student is filled with associated costs. Many of these are detailed in the financial aid award letters and packets colleges send out, but other expenses can add up.

Don’t forget to plan for expenses like these listed below when estimating your cost of attendance. Having a clear idea of all your expenses upfront will allow you to better plan how you will pay for college.

Class or major-specific materials and fees

Your award letter probably provides an average cost for books and materials, but depending on specific classes, you may need to budget more. For example, you may need to purchase specialty art or lab supplies, specific software or even tickets to local performances or speakers for certain classes.

Social and pre-professional dues and fees

Fraternities, sororities, pre-professional societies, clubs and student organizations often have membership fees, as well as costs associated with special events, trips, conferences and clothing.

Entertainment costs

Sporting events, concerts, movies and other entertainment can add up. In addition, you may need to pay for cable or another TV subscription service, dining outside of a meal plan, snacks, beverages and more.

Printing and photocopy fees

While the world of academics is progressively moving toward electronic communication, you may need to print materials, signs, resumes and portfolios for presentations, interviews and other occasions. You may have a printing allowance included in the cost of attendance, but watch especially for limits on color, 3-D and other specialty printing.

Clothing

Besides an initial outlay for clothes appropriate for the weather and fashions at a specific school, students often buy new clothes for theme days or holidays, special events, interviews and jobs. Don’t forget to budget spirit wear for game days.

Extra travel

Many college award letters list an average amount for transportation. This may not cover your specific costs for travel to and from a faraway home or travel expenses for study abroad, internships or co-ops, conferences, service trips or even trips over breaks. If you take a car to college, you may have parking, insurance and maintenance costs on and off campus, or you may end up paying for cabs, Uber, trains or buses if you don’t have a car available.

Bank and financial fees

If your financial institution doesn’t have a branch on or near campus, you may be responsible for extra fees for using the ATM. Colleges may also charge fees if you choose to use a payment plan or to pay your tuition bill by certain methods.

Health and fitness expenses

If a college doesn’t include membership to a campus fitness center in its fees, you may need to budget for that expense. In addition, physical therapy or personal training services may be available only at an extra charge.

Health insurance

On a related note, consider whether there are extra fees for using your family health insurance in the college area. Many colleges offer their own insurance plans and automatically enroll students. Check with the college to determine if you are being charged for health insurance and how you can avoid paying for double coverage.

Parent travel

If you don’t attend college close to home, your parents may find themselves paying to travel to and stay in the college community several times a year, either for visits, special events or college functions like orientation and family day. This may affect the amount your parents are able to provide for other college-related expenses.

Renter or dorm insurance

You and your family may want to consider an additional policy or increase current insurance coverage in case of loss or theft of personal items at college. Insurance may cover contents of a dorm room or off-campus housing, bikes and computers, as well as other items.

Storage or shipping for breaks

If you attend college far from home, items that can’t be reasonably carted home will need to be either shipped or stored when the dorm closes for the year or while you are between off-campus leases.

Student loan interest

All student loans begin accruing daily interest from the moment they are disbursed to the school or the student. The federal government will pay interest on subsidized federal loans while you are in school at least half-time, but all other student loans have that interest added to the total repayment amount, which can significantly increase the amount you must repay. Choosing to pay interest during the school years can offset the accrual; otherwise, you will need to include that added interest in financial plans for the future.

You may have additional expenses not listed here based on your personal situation. Remember, you will need to repay any student loans with interest on your starting salary after leaving school, so consider how you can pay for these expenses as they arise without borrowing too much.

Iowa Student Loan has several tools to help you plan for college and life afterward. View our smart borrowing tools here.

By: Iowa Student Loan

Beginner’s Guide to Refinancing Your Student Loans

Repaying student loans can be stressful but refinancing may help make your life a bit easier. Here are three reasons refinancing may be a good choice for you.

  • Refinancing may lower your interest rate to help you reduce overall costs.
  • A new loan with a longer term may lower your monthly payment, which can help with other debt obligations or living expenses.
  • Refinancing lets you simplify repayment by bringing all your student loans together so you only have one student loan payment a month.

There are many things to consider before jumping into refinancing, though. Use this guide to determine whether or not it is a good option for you.

How does student loan refinancing work?

Student loan refinancing allows you to gather all or some of your loans into one new loan, often at a lower interest rate that may help you pay less over time or provide you with a longer repayment term that will lower your monthly payment. This is a great option if you have multiple student loans, but you can also refinance if you have just one loan.

Is there a difference between student loan refinancing and consolidation?

Yes; although the terms are often interchangeable. Student loan consolidation most often refers to the federal program. Student loan refinancing usually refers to programs offered by private lenders.

What is student loan consolidation?

Consolidation typically refers to combining your federal student loans into one new federal loan with a new term. It does not necessarily provide a lower interest rate as your new rate will be the weighted average of the interest rates on the loans being consolidated. Student loan consolidation is not usually considered a money-saving option. With a consolidation loan, though, you may be eligible for different income-driven repayment plans and certain loan forgiveness programs as long as PLUS Loans for parents are not included when you consolidate.

How is student loan refinancing different?

Refinancing is offered by some banks, credit unions and other specialized student loan lenders. This type of loan allows you to combine federal and / or private loans together for a new rate and term. Repaying with a lower interest rate, and thus lowering your overall costs, is one of the main benefits of refinancing. Rates are generally determined based on your current financial strength. Cosigners can help you qualify if you are fresh out of college and don’t have much credit built up yet as well as help you obtain lower rates.

  Federal Direct Consolidation Loan Private Student Refinance Loan
What type of student loans are eligible? Federal Federal and private
Do I need to meet specific credit criteria? No Yes
Can this simplify repayment? Yes Yes
Will this reduce my interest rate? Not significantly Possibly; depending on your current loans and your credit score today

What are your student loan refinancing goals?

In general, most people only think about refinancing if they believe they’ll get a lower interest rate, but that is not the only reason to refinance. If you’re considering a refinance loan, it’s important to find the loan that can help you meet your goals.

Do you want to pay less overall?

Refinancing your loans to repay at a lower interest rate is the most common reason people state they want to refinance. If that is your goal and you qualify for a lower interest rate loan, refinancing can definitely help you pay less overall. Just be sure the new loan term is similar to the remaining terms on your existing loans. If you qualify for a lower interest rate but choose a longer repayment term than your current loans, you likely will not pay less over the life of a loan.

You can also choose a shorter repayment term to reduce your overall cost, although that often means higher monthly payment amounts.

The best way to reduce costs over the life of the loan, if you can afford the higher monthly payments, is to refinance to a loan with a lower interest rate and a shorter repayment term.

Are you looking to lower the amount you pay each month?

If your current monthly student loan payment amount is too high or you’re struggling to make payments on time and have enough money left over for living expenses, refinancing to a new loan with a longer repayment term is an option. You will likely pay more over time as interest accrues daily on student loans. This means that the longer you’re repaying a loan, the more interest you will pay. One strategy to keep in mind if you need lower payments now and decide to refinance to a longer repayment term is to pay extra as your budget changes in the future. That way your loan can be paid in full sooner and you will pay less in interest.

Would you like to only make one payment each month?

Another popular reason to consider refinancing is to stop making multiple payments to different lenders each month. If you refinance all your loans into one new loan, you will only have to make one payment each month instead of remembering to pay all the lenders monthly.

Are there drawbacks to refinancing student loans?

Refinancing may help you save money and simplify student loan repayment, but there are a few things to consider before refinancing. Not all student loans are the same and you’ll want to research the benefits and repayment options different refinance lenders offer.

Federal student loans have benefits and repayment options that are not available for private student loans. If you choose to refinance federal loans into a private loan, you will lose the federal loan benefits that go along with them. Most federal student loans come with different options for repayment, such as income-driven repayment plans, as well as more deferment and forbearance options and loan forgiveness programs for certain borrowers. These vary depending on the type of federal loan. Federal PLUS Loans for parents do not have the same benefits as federal loans made to student borrowers.

If you do not foresee any difficulty making your minimum payments and you do not intend to apply for a federal loan forgiveness program, then refinancing federal loans into a new private refinance loan may be a viable option for you.

Private student loans vary by lender. Research your current lender’s repayment plans and the options for you to postpone payments should you run into a short period of financial hardship, as you may lose those benefits if you refinance. A new refinance lender may offer similar or different benefits and assistance options.

Will applying to refinance your student loans hurt your credit score?

Refinancing student loans doesn’t typically impact credit scores significantly.

When considering your options, check to see if the lender offers a pre-qualification option that provides you with the rates and terms you are eligible for before making a decision to apply. Most of the time, this step does not impact your credit at all since it only involves a soft credit inquiry.

Once you complete an application and authorize a full credit inquiry, your credit score may be impacted a bit but typically only by a few points. If, however, you apply for loans with multiple lenders over a period of time, your credit score may be impacted more.

What do lenders look at when you apply to refinance?

Lenders review a few main factors about your credit history when you apply to refinance as they want to know you will be able to repay your new loan. As with most loans, they consider your credit score and payment history as well as your income and debt levels.

Before refinancing, you may want to know your credit score to see if you are eligible for better rates. It’s important to understand, though, that credit scores vary based on the consumer reporting agency and the calculation used, so the credit score you see from one source may not match the one the lender uses.

What steps should you take to refinance your student loans?

If you think refinancing is a good option for you, take these steps to refinance your student loans.

  1. Determine your goals when it comes to student loans.
    • Are you looking to lower your interest rate?
    • Do you want to lower your monthly payment amount?
    • Is simplifying student loan repayment so you have just one monthly payment important?
    • Do you hope refinancing will result in a combination of the above?
  2. Review your current student loan status.
    • Do you have federal and private, only private, or only federal student loans?
    • Who is your loan servicer?
    • Are your current interest rates fixed or variable?
    • What are your current interest rates? How many years are left until your current loans are fully repaid and what are your payment amounts now?
  3. Seek the best lender to fit your financial needs.
    • Does the lender provide customer service on its own loans? Or will your loan be sent to another company for servicing?
    • Does the lender have a good reputation for customer service?
    • Is the lender solely focused on student loans? Or does it have other products they’d like to sell you?
    • What sort of repayment plans, hardship assistance options and benefits does the lender offer?
  4. See if you can pre-qualify or get a rate quote before you complete an application. This will let you assess your new interest rates and repayment term options and determine if refinancing is the right option for you.
  5. If you decide to proceed, submit an application to be approved for refinancing.

Feelin’ good about refinancing?

Complete our pre-qualification process to see what rates you can receive. There’s no credit impact, and you only have to answer a few quick questions to reset your student loans and reduce your stress!

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By: Iowa Student Loan

Understanding Your Financial Aid Award Package

While college acceptance letters are often exciting, the arrival of financial aid award packages can be confusing. Keep these five things in mind as you review your financial aid awards to limit stress.

Financial aid is not all free money.

Depending on the college or university, financial aid may be presented under one large heading or broken down by type. Remember that work-study and loans, including federal and supplemental loans, are also part of financial aid packages. Work-study requires you to find and obtain work on campus, and loans must be paid back with interest after you graduate or leave college.

Cost of attendance varies by college.

Like the types of aid offered, college costs may be presented differently by different institutions. Tuition and fees may be grouped together or separated; room and board may be called housing and meals; and estimated expenses for books, transportation and miscellaneous may or may not be listed. You may also see tuition, fees, housing and meals listed as direct costs, while other expenses are shown as indirect costs because they are not billed by the school. Remember, many indirect costs are estimates or averages, and you may spend less or budget more depending on your situation. Be sure you understand what is included in each category to get a true comparison between schools.

Work-study requires work now.

If your award package includes a line for work-study, don’t assume the college will have a job waiting for you when you arrive on campus in the fall. As soon as you decide on a college, touch base with the financial aid office to determine what steps you need to take to get a job on campus. Then, apply for the job(s) you are interested in or seek out other opportunities to count on that money coming in once you start classes.

Outside scholarships may impact your award package.

You need to report any scholarships or grants you receive from sources outside of the government or college to the financial aid office. While those outside scholarships may reduce the aid you’re eligible to receive, they can also help you borrow less if you need loans, so don’t be afraid of finding as much outside free money as possible.

Expenses may increase and free aid may decrease after your freshman year.

College tuition, on-campus housing and meal plans will likely cost more each year you’re in school. Grants and scholarships you’re offered to attend a college as a freshman, on the other hand, may decrease in future years. Find out if scholarships and grants are for one year or if they are renewable. If they can be renewed each year, be sure you understand any requirements you must meet to keep those awards. Also, be aware that maximum federal loan amounts may increase every year you’re in college, but those funds will need to be paid back with interest in the future. It is a good idea to estimate total college costs to earn your degree so you can make a realistic plan to pay for your entire college career.

By: Iowa Student Loan

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