Questions about loans, scholarships, and stipends.

Paying for College
1

<p>Hi, new college freshman here with some questions. My college has really left me in the dark with a lot of questions I have. This is due to a combination of staff at the school not knowing the answers and/or the right staff to ask those questions to are simply impossible to get a hold of and don’t return phone calls. Regardless, after finding out I was declined for financial aid, I’m getting really stressed about all this. I’m wary of getting myself into a ton of debt that I will end up spending years of my life later on down the road paying off. Due to this, I am looking to find out more information about scholarships, grants, loans, and stipends. It’s pretty basic stuff, but things that the websites I’ve researched haven’t been very clear on. If you can help me out with any of my questions below, it would be greatly appreciated. I ordered the subjects numerically to make it easier to respond to anything in particular you know information about. Additionally, my major is going to be in the physics field.</p>

<ol>
<li><p>How easy or hard is it to get the federal loans that don’t accumulate interest while you’re in college? </p></li>
<li><p>How harsh are the interest rates for loans where it does accumulate while you’re in college? </p></li>
<li><p>When getting scholarships, if the scholarship specifically states it goes directly to your school, can that scholarship be used to pay off student loans that you have because of taking them out for that school, or can it only go towards future expenses of that school?</p></li>
<li><p>As you get further along with school, if you are able to keep high grades throughout, does it get easier to get scholarships and grants at that point? I’ve just seen so much information on the net about people who say they ended up owing little to nothing once they finished graduate school because of scholarships, grants, stipends, etc., but I’m starting to feel like that’s more of an exception to the case rather than the norm?</p></li>
<li><p>My college hasn’t helped me in the least bit towards trying to get financial help (enrolled for my AA this may). When you go on to pursue your Bachelors and Doctorate, do the schools start to help you more at that point when they realize you’re serious about this, or is it pretty much always the case where you are left to fend for yourself financially?</p></li>
<li><p>I’m not 100% sure where I’m going to end up for my graduate program at this point due to family and how we can roll with things down the road. I do want to head to the best school possible though. I have read that in my field of physics, many graduate programs will cover not only tuition, but living expenses as well (mainly because you don’t have the option of having time to do much of anything but school at that point). I am curious, how often is it that the schools offer these types of stipends in my field and is it typical for them to cover both tuition and living expenses?</p></li>
<li><p>Are stipends competitive like scholarships or are they the norm if you are accepted to that college? </p></li>
<li><p>Are there cetain types of colleges that tend to offer stipends more often than others? I’m interested in trying to go to some of the top schools for physics, so how are they (on average) in regards to offering this type of financial assistance?</p></li>
</ol>

<p>Thanks again for your help, it is deeply appreciated.</p>

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<p>*How easy or hard is it to get the federal loans that don’t accumulate interest while you’re in college? *
That depends on your EFC & to COA or cost of attendance at your school.</p>

<p>*How harsh are the interest rates for loans where it does accumulate while you’re in college? *</p>

<p>I believe Stafford loans are currently at 6.8% for unsubsidized.</p>

<pre><code>When getting scholarships, if the scholarship specifically states it goes directly to your school, can that scholarship be used to pay off student loans that you have because of taking them out for that school, or can it only go towards future expenses of that school?
</code></pre>

<p>If you used the scholarship to pay down loans, how would you pay your expenses?</p>

<p>As you get further along with school, if you are able to keep high grades throughout, does it get easier to get scholarships and grants at that point?
There can be funding for graduate school, it is competitive & depends on your field.</p>

<p>When you go on to pursue your Bachelors and Doctorate, do the schools start to help you more at that point when they realize you’re serious about this, or is it pretty much always the case where you are left to fend for yourself financially</p>

<p>It’s up to you to find a school you can afford.
[FinAid</a>! Financial Aid, College Scholarships and Student Loans](<a href=“Your Guide for College Financial Aid - Finaid”>http://www.finaid.org/)</p>

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<p>@emeraldkity4</p>

<p>As far as the 6.8%, would that be annually? If so, wouldn’t that make it not worth it to get unsubsidized loans considering you’d end up in so much debt, you’d be better off working a job that pays less but doesn’t cause you to get so indebted?</p>

<p>Secondly, as far as paying expenses, I was asking the question in a case where if I got enough scholarships to cover current expenses and didn’t have any upcoming (due to grants/stipends/etc.), can the extra be used to start paying back loans? I thought that was a bit obvious there.</p>

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<p>Stafford loans incorporate both subsidized and unsubsidized loans. There are maximum caps on both and the school will tell you the amount of each in your fin aid award. You can’t just choose to have one or the other.</p>

5

<p>Also, usually outside scholarships that exceed your need received after aid disbursement result in a check for the overage which you can pay on the loan if you wish. For future aid, normally the loans are just reduced by that amount so you are just borrowing less.</p>

6

<p>

</p>

<p>Most graduate physics program fund their grad students by offering either teaching or research assistantships. These offer a tuition remission plus a living expenses stipend. (Stipends are running in the $20,000-$25,000 range at many schools right now.) You are expected to work in return for the stipend–either by TAing/teaching undergrads or by working as a research asst for a research group. Or a combination of both. </p>

<p>

</p>

<p>Admission to top grad programs is extremely competitive. But generally if you are accepted, you will likely be funded. Occasionally, a program will accept you, but not fund you. If that happens you have a choice to go there and pay your own way (typically by taking out student loans) while hoping to get picked up for funding by a research group after you’ve proven yourself , or going elsewhere/not at all. Not getting funded is more likely to happen if you’re taken off a waitlist or are accepted later in the admission cycle.</p>

<p>

</p>

<p>Grad physics programs all fund their students–from the top programs down thru very mediocre programs.</p>

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<p>Thanks for the info so far, it’s been very helpful. </p>

<p>One thing I’m still not sure about is student loans. From what I understand based on my research earlier today, if you have a stafford unsubsidized loan and it was at 6.8%, you are paying 6.8% on it annually until it is paid off, correct? So if I had to take out loans right from the start at this point which end up having some money unsubsidized, that means that for the next 9-10yrs while I work on getting my doctorate, I’ll pay 6.8% the whole way through? Between the original loan and the stacking accumulation from interest, wouldn’t that over double what your loan originally was? Also, with owing that much and that much interest accumulating every month, wouldn’t you have to pay an insane monthly amount just to keep from only paying interest on it and never getting ahead? Is there no way around this or to prevent the loans from inflating so harshly while you are going to school?</p>

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<p>

The majority of the loans (roughly 75%) are subsidized so there is no interest accumulating while you are in school. For the unsubsidized loans there is nothing to stop you from paying the interest as it accumulates.;)</p>

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<p>I am not sure what the criteria are to receive a subsidized loan, but my student who is currently in school has two unsubsidized & one subsidized loan. Our EFC is pretty close to COA. ( within $2K or $3K)</p>

10

<p>I don’t know either what qualifies for the subsidized as it is based on financial need but we have always qualified. Of course, our EFC has been in the 2K to 6K range so I imagine if your EFC is in the 10K+ range you might not be eligible.</p>

11

<p>Even when we only made less than $50,000 our EFC wasn’t lower than $10,000. ( more like $13,000)</p>

<p>I am curious where you got the data that 75% of Stafford loans are subsidized however. The information I found says the % is less than 50%.</p>

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<p>

My point was not that 75% of the total loans are subsidized but that of the maximum Stafford loans you could get $31,000, up to $23,000 of that can be subsidized or 74.19% of the total.;)</p>

13

<p>

Up to $23,000 of the $31,000 can be subsidized if the student has financial need (as determined by FAFSA). If the student has no need, then the whole loan will be unsubsidized. </p>

<p>OP, what is your EFC and the school’s COA? If your EFC is higher than the school’s COA, then you are not eligible for subsidized loans.</p>

<p>And yes, the loan will accumulate 6.8% a year on the outstanding balance (and you pay interest on the interest as it is added to the loan balance). After 10 years, is you do not pay any interest on the loan as you go, the loan balance on a $1,000 loan would increase to around $1900.</p>

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<p>One thing I’m still not sure about is student loans. From what I understand based on my research earlier today, if you have a stafford unsubsidized loan and it was at 6.8%, you are paying 6.8% on it annually until it is paid off, correct?</p>

<p>No, that’s not what it means at all. That is simply the interest rate on the loan. You accrue 6.8% of the amount of the original principal on the loan each year. For example, once you get your AA you will presumably be a junior, which means you can borrow up to $7500 for that year. 6.8% of $7500 is $510, so with an unsubsidized loan, $510 will be added to the total of your loan in the two years after you borrow it. After you finish your degree and after your 6 month grace period is over, the interest will capitalize if you haven’t paid it off - which simply means that they will add it to your loan balance, and it becomes part of the interest calculation. So your new loan balance becomes $8,520 after two years, and 6.8% interest starts to be calculated off that for the next year. And so on and so forth.</p>

<p>You can pay off as much of a loan as you want to each year. So let’s say you have $32,000 of student loan debt and you win the lottery. You can pay off that whole $32,000 in one lump sum. Or let’s say that you work out a payment plan with your lender and your monthly payment is $250, but you pick up a lucrative consulting job on the side, so now you can afford to pay more You can pay more than $250 a month so you can pay the loan down faster, if you want. On federal loans, there is no penalty for pre-payment. The faster you pay off the loan, the less interest you have to pay. You can play with the loan calculator at Finaid.org and see how it works.</p>

<p>*So if I had to take out loans right from the start at this point which end up having some money unsubsidized, that means that for the next 9-10yrs while I work on getting my doctorate, I’ll pay 6.8% the whole way through?[/i</p>

<p>First of all, hopefully it won’t take you 9-10 years to get a physics PhD. 5-7 years is about the average in the lab sciences. If you add the 2 extra years it should take you to finish your bachelor’s, then that’s 7-9 years.</p>

<p>Second of all, you can defer your loans while you are in school. Some people choose to pay off their loans while they are in grad school anyway, so they won’t accumulate so much interest on the unsubsidized loans. Some people choose to just pay the interest, since as you can see if you’ve only borrowed a small amount, the interest is pretty low. And some people choose not to pay everything and just deal with it when they graduate.</p>

15

<p>Well thanks again for the information everyone. From everyone’s feedback, it all makes a lot more sense to me now. I appreciate all your help on here and best wishes to all of you.</p>