<p>How are loans financial aid?</p>
<p>-You still have to pay them back.
-Even someone with a high EFC can take out loans. </p>
<p>So I don't really get how they expect someone with a very low EFC to take out loans that equals almost half of the yearly tuition, and pay them back eventually...</p>
<p>loaning money is a business -- they are looking to make money.</p>
<p>you are limited to a certain amount of stafford loans as an dependent undergraduate -- $2625 for a freshman.</p>
<p>private loan companies are willing to lend even more -- although that kind of debt is difficult to pay back and I don't think it worth it.</p>
<p>it is highly recommended that you keep your loan amounts low -- if you don't have the money to attend and the financial aid is alot of loans, go to a different school.</p>
<p>loans are financial aid because they "aid" you "financially" in attending the university. schools are not obligated to provide you with the means to attend.</p>
<p>financial aid packages can (and do) include student loans, parents loans and work-study -- they also expect a contribution from the parents and from the student.</p>
<p>The way that they're financial aid is that you don't need collateral or an additional credit check, and that the interest is subsidized so that there is no interest and you don't have to begin repayment until 6 months after you graduate. And repayment plans are generous.</p>
<p>i'm curious a/b this...if one is awarded financial aid (loans) through the school, do they still go through the process of applying w/ a cosigner as with any other private loan.</p>
<p>chedva -- not all loans are subsided with no interest -- those are only for students with a certain EFC. Many kids get unsubsidized stafford loans, the interest accrues but the payments don't start until after you graduate.</p>
<p>as far as loans other than stafford -- many schools include parent plus loans in the FA package, and those do require a credit check. many other schools will direct you to private lenders to meet the need that they "gap" (most schools do not meet 100% of your need, so even with FA you still have to pay the EFC plus the amount the school gapped).</p>
<p>NYU is notorious for gapping -- here is the link to "alternative loans" they offer: <a href="http://www.nyu.edu/financial.aid/private_loans_undergrad.html%5B/url%5D">http://www.nyu.edu/financial.aid/private_loans_undergrad.html</a></p>
<p>So they would expect you to pay back all of the loans within six months after you graduate? For me, that'd probably be about $40,000! (for all four years)...</p>
<p>no, they expect you to begin paying them back after six months.</p>
<p>
[quote]
not all loans are subsided with no interest
[/quote]
Yes, I'm well aware of that; I was discussing primarily those loans that I believe are financial aid.</p>
<p>Think of loans given through the school (excluding parental loans) like business start-up loans. You don't have the cash flow to put enough into your business to get it started, and you hope to be successful enough to pay those loans back. </p>
<p>In the college context, your education is your "business". You don't have the cash flow to pay for tuition up front, so the loans allow you to go to school until you're successful enough to pay them back.</p>
<p>
[quote]
no, they expect you to begin paying them back after six months.
[/quote]
</p>
<p>Oh ok, phew..lol.</p>
<p>Lame question, but what's the difference between subsidized and unsubsidized loans? Is one worse than the other?</p>
<p>I <em>believe</em> subsidized means the government pays the interest on the loan until you graduate from college, though I'm not positive.</p>
<p>brand_182 -- that is correct, the interest is paid by the government until repayment begins (6 months after discontinuing school -- whether graduated or not).</p>
<p>both subsidized and unsubsidized stafford loans as well as perkins loans and parent plus loans are routinely included in financial aid packages -- only the interest on subsidized stafford loans is paid by the government, the other loans accumulate interest.</p>
<p>what if you go on to graduate school right after after undergrad? do you still have to start paying off the loans 6 mos. after you finish undergrad?</p>
<p>No, generally it's 6 months after you graduate from an accredited program and don't go into another one. (I actually did just that. I went from college to grad school to law school. Didn't start paying until 6 months after law school graduation.)</p>
<p>You can also begin another round of deferral of payments if you return to school after a period of working. So you graduate with your bachelor's degree and work for a couple of years, and begin payments on the loans. You then decide to go back to grad school full-time. You can defer payments again on the loans that you already began paying (and of course on any new loans to allow you to go to grad school).</p>
<p>I think too many kids take out loans not really understanding the full ramifications of paying them back. </p>
<p>I'm a big proponent of them plugging in some numbers into a loan calculator and then figuring out a budget for when they graduate. Most will be be truly shocked at how tight their money will be, especially for large loans over $25K - to the point where they will be living home and not buying a new car (they'll have enough trouble paying for car insurance, gas and maintenance).</p>
<p>Here is a calculator:
<a href="http://www.finaid.org/calculators/loanpayments.phtml%5B/url%5D">http://www.finaid.org/calculators/loanpayments.phtml</a></p>
<p>The other things kids need to know is that come hell or high water, they WILL be paying back that loan. They can not even get rid of it in bankruptcy.</p>
<p>They are extinguished by death. A silver lining for the heirs.</p>