Before Applying for a Student Loan

So, awarded financial aid isn’t enough to cover the full cost of attendance and you know you or your student will need additional student loans to pay for college. Before filling out loan applications, consider future repayment for any loans. Here’s what you need to know.

Federal student loans are limited.

Undergraduate students can take out only so much in federal student loans each year. If additional student loans above that limit are required, you may need to consider private student loans or parent loans.

Undergraduates need adult assistance.

Students need to have a creditworthy cosigner for any private student loans, unless they can meet underwriting criteria on their own. If parents are willing to consider a federal Parent PLUS Loan, the parents will need to borrow that money and be responsible for paying it back themselves.

The debt will need to be repaid.

Student loans are not usually dischargeable for bankruptcy or other financial hardship. When you think about a future repayment amount, remember:

  • The repayment amount will be more than the original loan amount. Student loans accrue interest on a daily basis. At certain times, unpaid accrued interest may be capitalized, or added to the principal balance, and begin accruing interest as well.
  • Payments may come from a limited income. Carefully consider how much a graduate with the same major can realistically expect to make in an entry-level position. Add anticipated student loan payments for all the undergraduate years, including any federal loans in the financial aid package, to anticipated expenses for a realistic budget based on a starting salary. If all your expenses can’t be covered with a realistic starting salary, student loan debt may need to be reconsidered.

Interest and other payments can be made during college.

Most lenders allow early or extra payments on student loans at any time without penalty. In addition, paying interest as it accrues during school can reduce the amount of interest that will need to be repaid after graduation.

Private student loans vary.

Every lender has its own underwriting criteria, qualification requirements, loan terms and repayment schedules. Before you sign for a loan, research your options. Consider:

  • Variable vs. fixed interest rates. A variable rate may go up or down according to market conditions, while a fixed rate remains the same throughout the loan term. A low variable rate is often appealing, but remember that it may change drastically over the loan term.
  • Actual interest rate. Many lenders offer different rates based on the applicants’ and cosigners’ credit. If you are unable to determine your rate upfront, consider the highest rates.
  • Repayment assistance and benefits. Some lenders or loan servicers offer assistance if a borrower is unable to make required monthly payments. Some loans also offer special benefits, such as a reduced interest rate for making automatic electronic payments. Consider these features carefully.
  • Managing repayment. Will additional loans be needed for future years? Should all loans be obtained from a single or limited number of lenders to make repayment easier? Will consolidating multiple loans later be important, and does the lender offer that option?

College choices matter.

If you find that you or your student cannot afford to take on enough debt to pay the full cost of attendance, a new plan might be essential. Some options students have include:

  • Earning more. Increase the ability to pay college costs as they occur by earning more income during school terms and on breaks.
  • Reducing expenses. The full cost of attendance may include expenses that can be cut. Can living off campus without a meal plan save money? Are the book and fees and transportation costs realistic for you or your student?
  • Asking for help. Are relatives willing to help pay for college? Are additional scholarships, either through the school or outside entities, available?
  • Attending a less-expensive school. If the cost of attendance is still not affordable without taking on unmanageable debt, you may need to consider attending a less-expensive school, at least for a year or two.

Visit Student Loan Game Plan for more information and tips.

By: Iowa Student Loan

Making the Leap: Financially Preparing for College Life

The first year of college may bring a lot of new experiences, and for many, this includes the need to budget a limited income for the first time. Earnings from a summer job can provide financial help for the school year as well as the opportunity to learn how to be financially independent.

Follow these five steps to make the most of the opportunity this summer.

1. Take time to really understand the financial aid package. Make sure you have a good idea of expected aid and how much college will cost for the student as well as the parents or other financial supporters.

  • Each college provides set costs for tuition, fees, room and board, and expected expenditures like books and transportation.
  • In addition, families often face additional expenses that either add up over time or weren’t expected.
  • How much awarded financial aid is gift aid? Grants and scholarships do not need to be paid back and fall into this category. Be aware, though, that many awards are one-time gifts and are not renewable for future years.
  • Is work-study reliable? Work-study awards are dependent on the student finding a qualified position and receiving the wage and hours required to total the award. Check the college’s website for a job board or financial aid section to gather information. Social media can also provide insight on whether students are able to find adequate work-study jobs.
  • Remember that loans must be paid back, with interest. It may help to calculate an expected monthly payment for anticipated college loans and compare that to average monthly payments for a car, house or other major expenses.

2. Track spending. Keeping track of purchases for a week or a month helps indicate where and on what most spending occurs.

  • Apps like Mint and tools like banking or card statements can be helpful.
  • A pattern of where spending can be cut or reduced may start to become clear.

3. Set up a basic budget. Budgets compare income and other funds to monthly expenses to keep consumers from spending more money than they have.

  • Take into account taxes and other deductions that will be removed from gross earnings. A site like PaycheckCity can help estimate these.
  • Divide up expenses into general categories based on typical spending.
  • Consider how spending will change once the academic term begins.

4. Plan out a monthly budget. Use realistic numbers to calculate an in-school budget.

  • Don’t forget that earnings will need to cover expenses for the remainder of the summer plus the entire academic year, unless the student also works while taking classes.
  • If a school-year job with the desired hours or pay doesn’t happen, or if it’s necessary to reduce hours to concentrate on schoolwork, each dollar may have to go further.
  • If parents are contributing to expenses, how will that happen? Options include a one-time gift intended to last through the school year, a monthly deposit into a checking account, a shared credit card account for certain purchases, or another method.

5. Evaluate the results. Adjustments may be required, based on the initial budget and events that occur later.

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

Iowa Families Can Win Cash for Educational Expenses – Register by May 11

Iowa high school students and their families can enter weekly drawings for two $250 awards, and Iowa high school seniors can enter a grand prize drawing for two $1,500 awards by completing a free online tool that helps them estimate the total cost of a four-year undergraduate degree.

Learn more and enter the giveaway today!

Iowa high school students, and their parents or guardians, can enter their information for the drawings after completing the College Funding Forecaster until May 11. The free online tool provided by Iowa Student Loan uses information from students’ freshman year financial aid award packets, as well as outside scholarships and grants and family savings and earnings, to project estimated costs, funding gaps and potential student loan debt over four years.

“We want to help families make the connection between first-year costs and the total financial investment in a college education,” said Steve McCullough, president and CEO of Iowa Student Loan. “This tool helps them see how their costs might increase, what happens when one-year scholarship awards are exhausted, and how the family and student contributions can play a role in reducing overall costs.”

The tool allows families to customize both expenses and available funding to adjust results for changes in students’ situations over the four years. The results show yearly and total estimated costs of attendance, available funding and projected funding gaps. The tool also provides informational tips on how to reduce costs and potential debt.

After viewing their results, users have the opportunity to enter the drawings. Two names will be drawn each week to receive $250 awards for educational expenses. In a grand prize drawing, two names will also be drawn to each receive $1,500 for the students’ college expenses in fall 2017. The grand prizes will be paid directly to the students’ colleges.

For details and complete rules for the giveaway, visit www.IowaStudentLoan.org/Giveaway. Or, to begin the College Funding Forecaster and enter the giveaway, go to www.IowaStudentLoan.org/Forecaster.

By: Iowa Student Loan

The Graduation Checklist for Parents

This milestone for your student can mean a lot of work for you. Use this checklist to bring some order to the chaos.

□ Work with your student to be sure they’ve completed the administrative steps to officially graduate.

  • Remind your student to follow through on these tips for college students and high school graduates.
  • Your student should receive information on how and where to obtain a cap and gown—along with any special stoles, pins, tassels or regalia—for the ceremony.

□ Consider mementos of the occasion.

  • Your student will have the opportunity to order class rings, yearbooks and other products to mark this important milestone. Check for deadlines.
  • Graduation is also a good opportunity for family and individual photos. Many photographers specialize in senior portraits.

□ Make any reservations required.

  • If you will be traveling to a college graduation, you may find that hotel rooms and transportation options are booked quickly and up to a year in advance.
  • Graduation party venues may also become scarce depending on location and number of other graduates on your desired date.
  • If you will order baked goods, catering, tents or other services, be sure to start that process early.

□ Invite friends and family to the party.

  • Work with your student to plan a celebration everyone will enjoy.
  • If guests ask what they can gift to your high school graduate, consider suggesting contributions to a college saving account or a gift card that can be used for textbooks and materials.
  • Don’t forget to have thank-you cards on hand for your student to send shortly after the celebration.

□ Start planning the move.

  • Whether your college student is moving to a new job or returning home for a while, he or she may need assistance. See our moving checklist for college graduates.
  • As your high school graduate prepares to move to campus, keep a copy of the college’s suggested packing list handy. Also see some items you may want to take care of before fall term begins.

By: Iowa Student Loan

Student Loan Pro Tip: First Year Salary (Video)

Borrowing more than you can comfortably afford to pay back is setting yourself up for a difficult financial future. A simple rule to follow is not to borrow more to pay for college than your expected first year salary.

To learn more about student loans and avoiding debt, check out our Smart Borrowing resources: http://www.iowastudentloan.org/smartborrowing.

By: Iowa Student Loan

10 Budget Tips for Spring Break (Infographic)

Download Infographic as a PDF.

Spring break can mean fun, sun and no worries, unless you blow your budget. Use these tips to help you stay on track during break and save your money for your education.

1. Plan ahead.

Start scouting for sales and less-expensive options early. Check out flights, hotels, destinations and activities so you don’t pay more for last-minute decisions. Read reviews of the activities or venues you want to include to see if they’re worth the cost. Also, pack everything you’re likely to need to avoid tourist prices on sunscreen, sunglasses, raingear, chargers and attire.

2. Take a cheaper flight.

Airfare is expensive, especially during high traffic times like spring break. But you can save some money by flying discount airlines, at off-peak times and days, non-direct and through alternate airports. In addition, check to see whether you can save by sitting separately from your companions and avoiding baggage fees.

3. Drive or ride instead of flying.

Buses and trains may get you where you want to go at a big savings. Or, get together with friends to share a road trip to your destination. These may take longer than flying but can be as much fun as the destination.

4. Take the road less traveled.

The beaches of the eastern seaboard are often less crowded than those of Florida, Mexico or Texas during spring break and can offer savings. Maybe this is the ideal time for you to explore the mountains or the desert and avoid the party scene.

5. Stay for less.

Apps and sites like Airbnb, VRBO and hostels.com can point you to less expensive lodging wherever you decide to go. Consider camping if you’re driving—government-owned sites are often least expensive, and you can even rent camping gear. To spend even less, stay with someone you know. Check out options for your final destination and lodging along the way.

6. Save on activities.

Look for discounts before you go through memberships like Costco and AAA, as well as apps like RoadTrippers, Groupon and Living Social. Also, an Internet search may turn up promotional codes you can use when you book. Once you arrive, some places may offer a discount if you show your student ID, and look for coupon books in the lobbies of hotels.

7. Save on food.

Depending on how you’re traveling, it may make sense to stock up on food for meals and snacks as well as beverages before you leave. If you’re flying, look for discount chains once you arrive. Preparing your own food will save on high restaurant and venue costs. See more tips for budget dining on spring break. <link to other post>

8. Avoid impulse buying.

It’s tempting to pick up a memento of your trip or to indulge yourself. Think about whether that coconut mug or t-shirt will get any use when you get back, or if the signature drink is worth the cost. Set a budget for each day and stick to it. You could even only bring the amount of cash you want to spend with you, leaving your credit card and extra cash in the hotel safe.

9. Use your legs.

Instead of renting a car, taking cabs or using Uber, consider renting a bike or simply walking where you need to go at your destination.

10. Stay out of trouble.

Avoid large fines and penalties by knowing and abiding by the laws at your destination, including those for driving, consuming alcoholic beverages and noise.

By: Iowa Student Loan

Five Advantages to Working During Breaks

If you need to build up savings for college and living expenses, think about a job during holiday and spring breaks.

Here are five advantages to working during school breaks.

Maintain your regular study schedule.
Because you don’t have classes to take up a large part of your day, you can often dedicate a large chunk of time to your job. If your break also falls between school terms, you can devote even more hours to earning money since you won’t have studying or homework to do.

Build up earnings.
You may be able to work 40 or more hours a week to maximize your earnings in a short period of time. Even better, while you’re working many hours, you have less time and opportunity to spend your earnings, so you’re able to save more to reach your financial goals.

Take advantage of openings.
Many employers need extra, short-time help to deal with the increased workload during the holidays. Besides standing behind a cash register, you may be able to find positions to help with stocking, holiday displays, returns and exchanges, or filling in for others who are on vacation. Seasonal employment is also more widely available.

Gain work experience.
You may find it easier to land a paid internship or co-op position for a short break than you would for an entire semester or school term. Even jobs that aren’t directly tied to your intended career can provide valuable transferrable skills.

Create a relationship.
As a reliable seasonal employee, you may be able to return to the same position, or more advanced positions with the same employer, break after break. You may even be able to land a permanent position or develop a network of mentors who will help you after college graduation.

See additional ideas for making money during breaks.

By: Iowa Student Loan

Choosing a College: Consider Costs

Cost of attendance is often the biggest factor in choosing a college, but the affordability of any particular college or university can be difficult to determine. Here are some steps you can take.

1. Know how much your family can pay for college.

The actual amount you can afford to spend may depend on a variety of factors. Be clear and honest about how much parents are able to contribute and the amount the student will be able to earn or save for college.

2. Understand actual cost of attendance numbers.

Colleges provide current cost information for tuition, fees, housing, meals and other expenses on their websites. Look at these numbers carefully to understand how they are determined. Do tuition and fees change based on number of credit hours? Are students living in residence halls required to pay for a more expensive meal plan? Are the average transportation or living expenses high or low for your situation?

3. Gather information about scholarship programs offered by the college.

The school website is also a source of information about eligibility for the different scholarships offered by the school. Check to see if any apply to your situation and whether they are guaranteed for any eligible student or are competitive awards.

4. Research scholarships, grants and other aid recently awarded to similar students by the schools you’re interested in.

Many colleges and universities offer data about the number of students who received aid and how much total aid was awarded through a document called the Common Data Set. To find it, type the name of the institution and “Common Data Set” in your internet search engine.

5. Estimate your family’s costs.

A net cost calculator can help estimate the amount you may be expected to pay at a particular institution. Search online for the name of the school and “net cost calculator” to find that institution’s tool. Some calculators allow you to input your family’s financial and other information to estimate available scholarships and aid; others are less robust and will provide a more general estimate of net cost. Certain factors, like a family business, may affect the accuracy of net cost calculators.

6. Determine a realistic timeline.

The amount of time it takes the average student to graduate may vary depending on the school, specific program and other factors. The graduation rates provided on the school’s Common Data Set may help you determine a realistic timeline.

7. Compare a reasonable estimate of the actual cost for a total college career to the amount you can afford to pay.

This information will help you decide if a college is affordable to your family. Remember, this is only an estimate, and you may be able to work with the financial aid office, increase earnings, reduce expenses or find additional funding to make a college choice more affordable.

By: Iowa Student Loan

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