I recently got in to my top choice school with a tremendous amount of aid, but some of that aid is in two small federal loans (one subsidized and one unsubsidized). I am probably going to accept the loans and aid in order to attend the school (without the loans I will not be able to afford the COA), but I’m concerned about taking out any amount of loans. Are federal loans better than private loans, or are they both risky and I’ll be stuck in debt for the rest of my life? It feels stupid not to take the loans that would allow me to attend my dream school but I was very resistant to taking out loans in any amount when I applied to college.
tl;dr - Would it be a mistake to take on small federal loans in order to afford my top choice school?
Are you talking about the Direct Loans…$3500 subsidized, and $2000 unsubsidized…
Or something else? If something else…how much.
@thumper1 yes I’m talking about direct loans
Direct loans yes, private loans or parental loans, no.
If taking these $5500 in loans for your freshman year make this school affordable…go for it. Even if you take these loans for all four years, your loans will be $27,000 total. Yes, it’s loans… but it’s not a huge amount and should be manageable in terms of repayment when the time comes.
In my opinion.
I would suggest comparing the net cost after grant aid (“free money”) and also the amount of loans you’ll have to take, at all schools that admit you. If you can avoid loans by attending a different college, is it still worth it to you? Really evaluate what you expect to gain by attending your dream school and whether it’s worth $27,000 plus interest (assuming you can go somewhere else debt-free or with lower debt).
If you can avoid taking unsubsidized loans, by working in the summer, becoming an RA, etc., that would be to your advantage. Subsidized loans are more of a slam dunk.
You might be able,to minimize loans in the future with job earnings or being an RA. But don’t count on that RA job. These tend to be highly competitive positions, and are certainly not something you should count on.
Is the Direct Loan the ONLY Loan you will be taking? Are your parents able to pay their family contribution with no difficulty? Will your summer and school year work earnings be available to you for incidental Expenses?
Look at the whole picture! Not just the amount of loans you will need to take.
The federally funded Direct Loan is a student loan…in your name only. Any private loan will need to either be co-signed by your parents or taken out by them.
@thumper1 yes the direct loan will be the only one I take, my parents can pay the rest and I plan to work over summers and am applying to some outside scholarships. @alooknac going to this school would be approximately the same cost as going to a state school because of the aid and loans but I am still waiting for financial aid from a few other schools and won’t make a decision until then. I also plan to be in contact with the financial aid office to possibly lower the loans and increase grant money if possible