Category: Financial Aid

What is Student Loan Forbearance?

Student loan forbearance is a short term way to pause or lower your monthly student loan payments. If you suffer from financial stress, a forbearance may offer 12 months or less of student loan relief. 

Due to the pandemic, students who took out federal student aid in loans may qualify. On Feb. 1, 2021, the federal government put in place an administrative forbearance. Will student loan forbearance be extended? The program put a freeze on federal student loan payments and set the loan interest rate at 0% until Sept. 30, 2021. That means, your loan balance may not increase even if interest rates do.

There are two types of forbearance available from the U.S. Department of Education. Each comes with a set of criteria and a form to file your request with. A general forbearance is also known as discretionary forbearance. That’s because it is up to your student loan lender to decide whether to grant your request for a suspension of payments. 

If it’s granted, the period cannot last more than 12 months at a time. When it expires, you may put in a new request as long as you’re within the cumulative limit of 3 years.

Mandatory forbearance means your lender has to grant the relief. Again, for no more than 12 months at a time. If you continue to meet the terms, you may put in a request for a new one once it expires.

Private student loan forbearance is different. In general, private lenders set less flexible terms compared to federal loans and options vary with each lender. For example, a lender may allow you to make interest payments only.

How Does Student Loan Forbearance Work?

Student loan forbearance works by providing a temporary pause on paying back your loans each month. You must qualify for one and then make a request by filling out a form based on your eligibility. Keep in mind, if you’re in default on your student loans, then forbearance may not be an option. 

A forbearance either allows you to make smaller payments or delay your payments for a specific period of time. As a result, unpaid interest on the principal balance adds up or accrues. Thus, each month you typically don’t pay the accrued interest.

Let’s say you receive a forbearance, but good favor hits and times get better. You could still repay your loans or even make smaller payments if this is an agreed upon option. On the other hand, if your period of forbearance ends and you’re still in distress, you may be able to reapply.

Who Qualifies for Student Loan Forbearance? 

Eligibility for student loan forbearance differs with each type of loan and student loan lender. If you have a private lender, some grant a forbearance period to students who take part in a medical residency or internship. Many also offer a six month grace period after graduation. This leaves you time to find a steady job and income.

As a federal student loan borrower, you may qualify for general forbearance for Direct Loans, Federal Family Education Loans (FFEL), and Perkins Loans. Some of the qualifying reasons are:

• Financial hardship
• Medical expenses
• Change in employment (loss of job, working less) that causes economic hardship

Mandatory forbearance may be available for Direct Loans and FEEL program loans. You may be eligible for one of these reasons:

AmeriCorps: You serve in an AmeriCorps position for which you earned a national service award.

U.S. Department of Defense Student Loan Repayment Program: You qualify for partial repayment of your loans under this program.

Medical or dental internship or residency: You serve in one of these programs and meet specific requirements. 

National Guard Duty: If a governor activates you, and you are not eligible for military deferment. 

Student loan debt burden: For Direct Loans, FEEL program loans and Perkins Loans. In this case, the total amount you owe each month for all the federal student loans you received is 20% or more of your total monthly gross income, for up to three years.

Teacher loan forgiveness: For those who perform an eligible teaching service.

Coronavirus and Student Loan Forbearance

When the pandemic hit, it became harder for many students to repay their loans. As a result, the government initiated the Cares Act to provide some relief.

According to the Federal Student Aid, on Feb. 1. 2024, all federal student loan payments and collections were put on pause. And, the interest rate set at 0% due to the financial impact of COVID 19. President Biden signed an executive action on his first day in office to keep this relief going.

That said, if it’s possible for you to make payments, it could help you pay off your loan faster and lower the total cost of your loan over time.

What are the Differences between Federal Student Loan Forbearance vs Private Student Loan?

Both federal student loan forbearance and private student loan forbearance are short term ways to cope with lack of funds to repay a loan. You should contact either loan servicer right away if you are having trouble making payments so as not to default. 

In the case of federal student loans, forbearance is usually granted for 12 months at a time and may be renewed for up to three years. The law mandates conditions and payment amounts for some types of these loans. 

For example, due to COVID 19, the law set the interest rate at 0% as of 2021 and studentaid.gov updates the site as changes unfold. Unpaid interest is capitalized only on Direct Loans and Federal Family Education Loan FFEL Program loans, but never on Federal Perkins Loans. 

Private lenders such as Sallie Mae may offer forbearance if you request it. The period may go to 12 months, but many lenders may not offer renewal. Each lender sets different conditions and amount for private student loans. Interest rates may vary too.

What are the Differences between Student Loan Deferment vs Forbearance?

Both deferment and forbearance allow you to temporarily postpone or reduce your federal student loan payments. You have to request both and wait for a yes or no from the lender. 

The main difference is if you are in deferment, no interest will accrue to your loan balance. If you are in forbearance, interest does accrue on your loan balance.

Student loan deferment is a temporary postponement of payment on a loan that is allowed under certain conditions and during which interest does not tend to accrue on. The following student loans may qualify for deferment:

• Direct Subsidized Loans
• The subsidized portion of Direct Consolidation Loans
• Subsidized Federal Stafford Loans
• The subsidized portion of FFEL Consolidation Loans
• Federal Perkins Loans

All other federal student loans that are deferred will continue to accrue interest. You must still make payments until you receive a confirmation that your request is granted. Otherwise, you may risk delinquency (being late for even one day) and default (being late for 90 days or more). 

According to the Federal Student Aid, being in default could affect your credit score as the loan servicer will report delinquency to 3 major national credit bureaus. Credit score matters if you ever need to finance a house, car, rent an apartment, etc.

How is this different from forbearance? A forbearance is a period during which your monthly loan payments are temporarily put on hold or reduced. Your lender may grant you one if you want to make payments but have a qualifying reason that explains you cannot afford to do so.

During forbearance, principal payments are postponed, but interest continues to accrue. Unpaid interest that accrues during the forbearance will be added to the principal balance (capitalized) of your loan(s), increasing the total amount you owe.

Different Types of Student Loan Deferment

How long are student loans deferred and getting deferment extension vs forbearance? Forbearance may last up to one year with the possibility to renew. Deferment periods vary and depending on the qualifying reason:

Cancer Treatment Deferment: You may be eligible during cancer treatment and for the 6 month period after it ends.

Economic Hardship Deferment: You may qualify for up to 3 years deferment if you receive a means tested benefit such as welfare. You may be eligible if you work full time but your earnings are below 150% of the poverty guideline for your family size and state. If you serve in the Peace Corps, this is another reason. 

Graduate Fellowship Deferment: If you’re enrolled in an approved program that provides financial aid to graduate students.

In School Deferment: This deferment tends to be automatic. As a rule, to be eligible, you must be enrolled at least half time at an eligible college or career school. If you’re a graduate or professional student with a Direct PLUS Loan, you may qualify for an extra 6 months once you stop being enrolled at least half time. 

Military Service and Post Active Duty Student Deferment: For this deferment, you must be on active duty military service tied to a war, military operation, or national emergency. If you’ve completed eligible active duty service and grace period you may also qualify.

Parent PLUS Borrower Deferment: This deferment is for the parent who received a Direct PLUS Loan to help pay for their child’s education. The student you took out the loan for must be enrolled at least half time at an eligible school. 

Rehabilitation Training Deferment: For those enrolled in an eligible career, mental health alcohol or drug abuse rehab training program.

Unemployment Deferment: This deferment may be available for up to three years. It is for those who receive unemployment benefits and are seeking but unable to find full time work in their job search. 

Private Student Loan Deferment vs Forbearance

It may be possible to defer your student loans or request a period of forbearance from a private lender. Each lender may set different terms and conditions but you typically have to request it and get their approval. Unlike federal loans, private ones are not included in the CARES Act.

Here’s an example with Sallie Mae student loans. If you request a deferment, Sallie Mae won’t ask you to make principal and interest payments while you’re in school or during your internship, clerkship, fellowship, or residency.

During deferment, your Sallie Mae loans return to the repayment option you chose when you took them out (i.e., interest, fixed, or deferred). That means if you were making either monthly interest only or fixed payments when you first took out your loan, you continue to make those throughout your deferment period.

That said, when you defer, interest grows while you’re in school, and increases your total loan cost. So, making any extra interest payments could lower this balance.

Is There a Difference between Student Loan Forgiveness vs Forbearance?

While loan forgiveness and forbearance help manage loans and payments, they are very different. Forbearance is short term only. Forgiveness, cancellation and discharge of your loans mean you no longer owe or have to repay part or all your loan. 

There are various types of forgiveness, cancellation, and discharge available for the different kinds of federal student loans. If you are eligible, it may help your credit score and have a zero loan balance. Compared to forbearance where you still owe and risk being in default. 

Different Types of Student Loan Forgiveness

PSLF is for eligible full time employees of U.S. federal, state, local, or tribal governments or nonprofits. There’s a specific form to fill out in order to request and potentially receive, forgiveness.

It forgives the outstanding balance on Direct Loans. You must make 120 qualifying monthly payments under a qualifying repayment plan. You also must work full time for a qualifying employer. 

Teacher Loan Forgiveness: This type of federal student loan forgiveness awards up to $17,500 in forgiveness. It may be available for Direct Loans and FEEL Program loans. You may be eligible if you teach full time for 5 consecutive academic years. This work must be in a low income elementary, secondary or educational service agency. 

Closed School Discharge: If the school you attend closes while you’re enrolled or soon after you withdraw, you may be eligible for discharge of your federal student loan. Eligible are Direct Loans, FEEL loans and Perkins Loans. 

Federal Perkins Loan Cancellation and Discharge: The basis for this kind of cancellation is eligible employment or volunteer service and the length you were in the position. Teachers, nurses, military personnel and other professionals from federally approved jobs that may qualify.

Total and Permanent Disability Discharge: This option may be available for holders of Direct Loans, FEEL Program loans, and Perkins Loans. You may qualify if your disability is total and permanent. In addition, you may be eligible for a discharge on TEACH Grants. 

Discharge Due to Death: Federal student loans are discharged upon death. Whether of the student on whose behalf a PLUS loan was taken out. Or, of the borrower. It may be available for Direct Loans, FEEL Program loans, and Perkins Loans.

Bankruptcy: It is rare, but you may be able to have your federal student loan discharged after you declare bankruptcy. This is not automatic and may be available for Direct Loans, FEEL Program loans, and Perkins Loans.

Borrower Defense to Repayment: You may be eligible for discharge of federal Direct Loans for this reason if you took out loans to attend a school (let’s say the school was a scam). And the school did or failed to do something related to your loan or the education you took out the loan to pay for.

False Certification Discharge: This is for those whose school falsely certified your eligibility to receive a loan. Direct Loans and FEEL loans to be exact.

Unpaid Refund Discharge: For Direct Loans and FEEL loans only. In this case you withdrew from school and the school didn’t make a required return of loan funds to the loan servicer. If you do qualify it is likely for the portion of your federal student loan(s) that the school failed to return.

Alternate Student Loan Repayment Options

Before you consider forbearance, there are alternative ways to repay federal and private student loans. You should assess each option to see which one you qualify for and is in your personal best interest.

Refinancing 

If you have private student loans and qualify for a better interest rate, you might consider refinancing. Lower interest rates means you pay less each month. That said, not all lenders offer this option. 

Consolidation

If you have a few student loans, you may be able to combine them into one loan with a fixed interest rate based on the average of the interest rates on the loans being consolidated. For example, a Direct Consolidation Loan allows you to blend multiple federal education loans into one loan at no cost to you.

Income Driven Repayment Plans

IDRs aim to make your student loan debt easier to manage by lowering the amount you pay each month. These plans base your monthly student loan payments on your income and family size. 

The federal government offers 4 plans but private loans don’t qualify for any of them.

1. Revised Pay As You Earn Repayment Plan (REPAYE Plan): Generally 10% of your discretionary income.
2. Pay As You Earn Repayment Plan (PAYE Plan): Generally 10% of your discretionary income. But never more than the 10 year Standard Repayment Plan amount
3. Income Based Repayment Plan (IBR Plan): If you are a new borrower on or after July 1, 2014, the terms are the same as the PAYE Plan. But if you are not a new borrower on or after July 1, 2014, it tends to be 15% of your discretionary income and never more than the 10 year Standard Repayment Plan amount.
4. Income Contingent Repayment Plan (ICR Plan): Whichever is less than 20% of your discretionary income. Or, what you would pay on a repayment plan with a fixed payment over a span of 12 years, adjusted to your income.

What Option is a Good Choice to Help Pay off Student Loans?

There are a few tactics that may help pay off a student loan and hopefully avoid either forbearance or deferment.

• Try to make extra payments when possible
• Set up automatic payments so you don’t forget
• Pay off capitalized interest because it brings your balance up
• Use any gift money to repay your student loan

If you did all these things and find yourself unsure, you should first contact your loan lender. The lender could inform you which option you qualify for and how to request it plus other next steps. 

Remember that both forbearance and deferment allow you to reduce or postpone payments in the short term only. While forgiveness is ideal (who doesn’t want the magic wand that takes debt away?) you may not qualify at all. 

Forbearance on federal student loans now has favorable terms with the 0% interest which means your total amount owed won’t go up. There’s also no impact on your credit score. Before you choose this route, compare with an IDR. These plans tend to be more long term.

On the other hand, if you qualify for a deferment, interest grows and adds up which may make it that much harder to repay. This could set you up for delinquency and default which is not ideal and affects your credit score. Still have questions? Check out our section on student loans.

What can you use student loans for? It’s that time of the year when students start to receive their financial aid refunds. This typically occurs when students have either secured enough money through grants and scholarships to cover their tuition and fees, or they have borrowed more student loan money than they actually needed.

What Can You Use Student Loans for?

If you fall into the second category, don’t rush out and spend that money just yet. Unlike the money you may have received from a scholarship or grant, your student loan money will eventually need to be paid back. I know it can be tempting to splurge a little, especially if you have been strapped for cash the last few weeks, but trust me when I say you’ll regret it after graduation.

Why? Student loans carry substantial principal and interest payments which can come back to haunt you later if you’re not careful and don’t budget accordingly. If you find you have a little extra money coming back to you this semester, here are few do’s and don’ts to consider when deciding how to spend your student loan money.

Do use your money to…

• Purchase food for your dorm or apartment.
• Pay housing or rental fees and room and board. 
• Cover your books and supplies for the semester.
• Pay for transportation or vehicle maintenance.
• Cover your utilities and other necessary living expenses.
• Pay tuition and fees for the summer semester.

Don’t use it to pay for…

• A weekend getaway to Las Vegas.
• Drinks for everyone at the club.
• The new spring collection at Forever 21.
• Pizza for the entire dormitory.
• Black lighting and a disco ball in your dorm room.
• Concert tickets to your favorite bands.
• Spring Break in Cancun.

It’s never a wise idea to use your student loan money to cover items that aren’t necessary for your education or daily living expenses. Why pay for a gym membership when you can use the campus facilities for free? There’s no need to purchase cable or satellite television, or splurge on the newest MacBook Pro, when there are more practical alternatives. Set a budget for yourself and stick to it.

Any additional funds you may have can be saved for future semesters, or you can start making payments on your current loans. You can even have the financial office reduce your federal or private loan if you know you won’t need the entire amount.

Some expenses may seem trivial, but they do add up.  For instance, if you spend $40 a week on fast food, over the course of four years that could add up to around $2,000. With a student loan interest rate of 6.8%, you’ll end up paying an additional $750 over the term of your loan (based on a 10-year repayment term).

If you extend your payments at any time, you’ll be paying even more. Be smart and follow these two simple guidelines: borrow only what you absolutely need, and restrict your spending to “needs” and not “wants.” If you don’t, you could be graduating with a lot more than just your college degree.

If you’ve exhausted your federal financial aid, and haven’t been lucky enough to win any scholarships to help cover your remaining expenses, chances are you are now researching private student loans to help pay for college. If so, there are several things you should consider before signing on the dotted line.

First of all, you’ll most likely need a cosigner, especially if you are a younger student or haven’t been working at a stable job for several years. Approximately 90 percent of borrowers will need a cosigner, so don’t take it personally. Next, you’ll want to be sure that you borrow only what you absolutely need.

Finally, consider the annual percentage rate being offered and any student loan borrower benefits that might be available. For those of you who may be unfamiliar with borrower benefits, these are perks you can earn based on a variety of factors.

Let’s take a look at some of the current benefits being offered by private student loan lenders and how they can affect your bottom line.

Automatic Payment Reduction of Student Loans

Most private student loan lenders offer borrowers anywhere from a 0.25% to 0.50% interest rate reduction for enrolling in automatic payment plans. This can translate into several hundreds of dollars in savings over the life of the loan.

For example, a $10,000 loan at a fixed rate of 8% paid over 10 years could result in a savings of approximately $237 (0.25%) to $463 (0.50%).

Savings may be less if you have a variable interest rate, a lower fixed rate, or choose a shorter repayment term. If you cancel the automatic payments at any time or a payment is returned for insufficient funds, the discount may be lost permanently, depending on the lender’s terms.

Student Loan Interest Rate Reduction

Existing Customers – If a private student loan lender offers an interest rate deduction for existing customers, it may be to your benefit to open a checking account with the institution, especially if it offers free banking services. As a loyal customer, you may be rewarded with either a 0.25% or 0.50% interest rate deduction over the life of your loan. As long as you maintain an account with the financial institution, you should continue to receive your discount.

On-Time Payments – Another way to earn a reduction in your interest rate is by making a certain number of on-time payments with your lender.

For example, Union Federal offers a 0.25% interest rate reduction after you have made 36 on-time payments (payments made within 10 days of the due date) and have enrolled in an automatic payment plan prior to the 36th payment. On a $10,000 loan over 10 years (8% fixed rate) that amounts to a savings of around $108.

Other – If you use Lend Key Student Loans to finance your college education, you may be eligible to receive a 1% interest rate reduction once you enter full repayment (after the grace period) and have repaid 10% of your loan principal (subject to a 2.99% floor rate).

Principal of Student Loans Reduction

Some private student loan lenders will offer you a principal reduction after certain conditions are met. For example, SunTrust will give you a 1% reduction under the Graduation Reward program, as long as you submit a certified copy of your college diploma within 90 days of graduating.

If you have made more than one late payment, you are no longer eligible for the reward. In general, a principal reduction is less valuable than an interest rate reduction because it is a one-time deal and not applied annually.

Cash Rewards from Paying Your Student Loan Debt

A few private student loan lenders offer cash rewards if you meet the qualifications for their programs. One of the most interesting right now is the Discover Student Loan 1% cash reward for good grades.

If you earn a 3.0 GPA or higher during the academic term covered by your student loan, you can submit a redemption request within 6 months of the final term covered by the loan.

The reward is calculated based on your disbursed principal balance and mailed directly to you. Keep in mind that you may owe tax on this type of reward since it may be considered income.

Another way to earn cash rewards is through the Sallie Mae Smart Reward® program, which gives you 2% of your scheduled monthly payments made on time while you are in school or during the grace period.

To receive this borrower benefit, you must have an active UPromise® account and select either the interest or fixed repayment option. Again, this type of reward may be subject to income tax, so the overall benefit may actually be much lower once that is taken into consideration.

In addition to these borrower benefits, some lenders also offer limited perks. Right now, SunTrust is offering a .75% interest rate reduction to students who submit a student loan application between June 1 and July 31, 2024. Once approved, the reduction will be applied on the initial disbursement date and be effective during the life of the loan.

Likewise, Citizens Bank is offering a 0.25% interest rate discount for applications for its TruFit Student Loan® received by June 30th, 2024.

In most cases, you can earn more than one borrower benefit, so the savings can really add up. Just remember to review your lender’s terms carefully and understand your obligations for maintaining these benefits.

Finally, when reviewing the repayment examples lenders provide, be sure to read the fine print to see if those examples include borrower benefits. We haven’t seen any that do, but when you are trying to compare you options, inclusion of benefits can make a noticeable difference in terms like APR.

Still confused? Get Informed About Student Loans Then, Get Matched To Online Schools Using Our Degree Finder!

Earlier this month, the Consumer Financial Protection Bureau (CFPB) released a report detailing the types of complaints it has received over the last three years. This not only included information about credit card and mortgage complaints, but also issues with private student loans.

Resolve a Student Loan Problem

The majority of the complaints the CFPB received regarding private student loans involved problems with consumers repaying their debt. Nearly 46 percent of consumers cited issues with billing, fees or restructuring their loans, and another 22 percent had problems when they were unable to pay on time.

Since these are common complaints among student loan borrowers, I thought it might be a good time to address a question I often get on social media: “Where do you go if you have problems with your student loans?”

Start With Your Student Loan Lender/Servicer

For issues regarding payments or balances due, be sure to gather any and all supporting documentation you may have on file. This will include notes you have taken during phone calls, correspondence received through postal mail or email, and all payment receipts.

Copies of your bank statements or cancelled checks may also serve to help verify payments. In many cases, you can log into your student loan account and pull a payment history, as well. Carefully review your paperwork to ensure your complaint is valid. If you find there is still a discrepancy, contact your student loan lender or servicer and file a formal complaint. Be calm and polite, and provide copies of all materials to support your claim.

You should also contact your lender or servicer if you are having difficulty making your payments on time. Ask about other repayment options, such as forbearance or deferment. If you have a federal student loan, you may also be eligible for one of several different repayment plans that can significantly lower your current monthly payments.

Most lenders will require proof of your income, so be prepared to provide copies of your recent tax forms and pay stubs to document any recent changes.

Regardless of the type of complaint, it’s very important that you document your process from the start. Whenever you speak with someone, take down his/her name, the date and time of the conversation, and keep notes about what was discussed. Always follow up in writing (paper or email); a paper trail is essential.

Request a copy of your customer service history, too. These steps will help you in the event your issue is not resolved.

Seek Additional Help

If you have provided suitable documentation to support your complaint, but your lender/servicer is still unwilling to help or the issue has not been resolved to your satisfaction, you may still have other resources at your disposal. Depending on whether you have a federal student loan or a private student loan, the next step will vary.

For federal student loans, you’ll want to review the Self-Resolution Checklist to ensure you have taken all the necessary steps to resolve the issue yourself. If you still need help, your next step would be to contact the Federal Student Aid Ombudsman Group. Before reaching out to them, complete the Information Checklist, as it lists many of the questions that will be covered during your initial consultation.

You can contact the Ombudsman Group by postal mail, phone, fax or you can file a confidential complaint through the online Ombudsman Assistance Request Form. Once the department receives your form, it will collect information about your case and offer assistance in identifying a suitable resolution.

If, however, you have a private student loan dispute, you should contact the Consumer Financial Protection Bureau (CFPB). Whether your student loan is issued by a bank, credit union or school, the CFPB can assist with finding a resolution for just about any student loan complaint. The process is fairly simple, too.

You can register your complaint online and attach any supporting documentation. Once your complaint has been received, the CFPB will forward it to your lender. The lender will have 15 days to respond and, in most cases, no longer than 60 days to provide a resolution. The CFPB has a very good track record for getting results, with 97 percent of lenders responding to complaints in a timely fashion. Over the last three years, more than 11,400 borrowers have filed a complaint, and 73 percent were satisfied with the resolution provided.

Even More Help Available

If you did not take the initiative to find a resolution for your student loan problems before you started missing payments, you may find that your are now faced with default. Although there is little recourse for private student loan default, you can still get help with federal student loan debt resolution through the Federal Student Aid’s MYEDDEBT.

Through this portal, you can get information on how much you owe on your defaulted federal student loans, your payment history, and options for resolving your debt. You can also access forms to request a hearing, review, or discharge of your debt, as well as forms to submit a complaint. Ignoring your debt won’t make it go away, so do yourself a favor and seek help as soon as possible.

Now that college acceptance letters have started to roll in, students will soon begin receiving financial aid award letters from their prospective colleges, as well. This vital component of the college planning process can be a bit confusing, especially when colleges do not use the Financial Aid Shopping Sheet created by the U.S. government.

This standardized form is meant to help students clearly understand what is being offered and allows them to easily compare award packages from different schools.

Unfortunately, fewer than 2,000 colleges to date have voluntarily adopted this form, which means some students may be unsure of what is actually being offered in terms of financial aid.

First of all, it’s important that students understand that not all financial aid is free money for college. In fact, most financial aid packages include a combination of gift aid and self-help aid. And this is where many students get lost or confused.

They see the total amount being offered, but don’t clearly understand what they are actually taking on in terms of potential debt. Before agreeing to any financial aid package, students must understand the distinct differences between the two types of aid. Here is a brief overview of each, and what students may see as part of their financial aid award packages.

GIFT AID

Gift aid, simply put, is free money for college. Students typically receive gift aid based on financial need, academic achievement, or for other skills and talents. Here are the major types of gift aid commonly offered to students:

Grants

In general, grants are awarded to students based on financial need. This may include Pell Grants and Federal Supplemental Educational Opportunity Grants, as well as grants offered through state and institutional programs. Students must complete the Free Application for Federal Financial Aid (FAFSA) so colleges can determine their eligibility for these awards.

Some colleges may even offer small grants to students who have done well academically, especially during the summer semester, if there are additional funds available. Students who lost a parent as a result of military service in Iraq or Afghanistan after 9/11 may also be eligible for the Iraq and Afghanistan Service Grant, even if their Expected Family Contribution (EFC) is too high for a Pell Grant.

Scholarships

Students can receive scholarships from a variety of sources and for a variety of reasons. The most common scholarships awarded by colleges are for financial need or academic achievement. Students may receive an award based on their SAT or ACT scores, class rank, grade point average (GPA), as well as the ethnic background, or their intended major.

In addition, student athletes at an NCAA Division I or Division II school may receive a scholarship for their particular sport. Those students who have a special talent, such as music or theater, may also receive a scholarship to help offset their costs.

It’s important to note that students can also receive scholarships from state agencies and private providers, such as local businesses and charitable organizations, though these may not be included on the financial aid award letter from their prospective schools.

Students must report any outside scholarships received to their college’s financial aid department, as it will be counted toward the total financial aid allowed and must not exceed the Cost of Attendance (COA).

SELF-HELP AID

Self-help aid is money awarded to students that must be paid back, or requires something in return, such as volunteer hours or a certain number of work hours. This includes the following categories:

Work Study

This need-based financial aid program is offered through colleges and supplemented by the federal government. Funding is limited, so it’s important that students apply early and indicate their interest when completing the FAFSA. If eligible, students may seek or be assigned part-time work either on or off campus.

The hours are typically very flexible and the money is paid directly to the student. Money earned through work-study programs is not counted as income when students apply for FAFSA the following year, therefore it will not lower their financial aid eligibility.

Some schools offer their own work study program unrelated to the federal program and wages earned will count toward student income reported on the FAFSA.  

In all cases, it’s important to know that these grants must be earned through work and that the award will not be directly applied to a student’s tuition bill.

Student Loans

Students may be offered federal loans, private loans, or a combination of the two. Unlike gift aid and work-study programs, the money received through loans must be repaid.

In general, federal student loans offer lower interest rates and have more flexible repayment terms for students. There are two federal student loan programs available. The largest, the Federal Direct Student Loan Program (FDLP), includes Direct Subsidized and Direct Unsubsidized Loans, Direct PLUS Loans, and Direct Consolidation Loans. The other, the Federal Perkins Loan Program, is a school-based loan program that is awarded to students who show exceptional financial need.

Eligible students may receive these loans regardless of their credit history, except in the case where a parent or graduate student is requesting a PLUS Loan.

Private student loans, on the other hand, require a good credit score. Most students will also need a cosigner with good credit to obtain a private student loan. It’s important that students review the interest rate, loan fees, Annual Percentage Rate (APR), length of repayment, and total cost of the loan before signing any documents.

Each lender is different, and some may have more favorable terms or offer repayment incentives, so students should compare offers carefully before making a decision.

Private loans should only be used when all other forms of financial aid have been exhausted, and students should only borrow the minimum amount required.

Students may find that their financial aid packages fall short of covering all of their expected expenses, especially if they have a high EFC and do not qualify for need-based assistance.

If there have been changes in their income, a recent hospitalization, or other factors that may have reduced their available college savings, students should contact their college financial aid office and request a review. In some cases, students may be awarded additional financial aid.

For those who still find themselves lacking the necessary funding for college, I suggest looking into other options, such as employer tuition assistance or reimbursement programs, or using a free scholarship search.

The PLUS Loan for Parents is a federal education loan program many families utilize to pay for tuition, room and board not covered by financial aid or other loans, such as Direct Student Loans, provided to the student.  In the PLUS Loan for Parents program, the borrower is a parent. However, your application for a parent plus loan denied

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A parent can borrow up to a student’s Cost of Attendance minus other financial aid including other student loans.  However, credit is a factor in determining eligibility for PLUS.  As such, not everyone will be approved. While the credit criteria used to determine approval for PLUS are not as stringent as they are for other consumer loans, a parent borrower still needs to meet a few credit-based conditions in order to receive financing.  

If those conditions aren’t met, a PLUS loan denial will be the result.  Don’t give up hope, there are still a few options left open.  We’ll go over each, but let’s start by looking at why you may be denied PLUS loan in the first place.

Denied for Parent Plus Loan

In general, you may be denied if you have adverse credit consisting of any of the following:

•  Bankruptcy discharge within the past five years
•  Voluntary surrender of personal property to avoid repossession within the last five years
•  Collateral repossession within the past five years
•  Foreclosure proceedings started
•  Foreclosure within the last five years
•  Conveying your real property that is subject to a mortgage (by deed) to your lender to avoid foreclosure (deed in lieu of foreclosure)
•  Accounts currently 90 days or more delinquent
•  Unpaid collection accounts
•  Charge-offs/write-offs of federal student loans
•  Wage garnishment within the last five years
•  Defaulting on a loan, even if the claim has been paid
•  Lease or contract terminated by default
•  County/state/federal tax lien within the past five years

In order to determine if one of those conditions applies, a credit check will be performed. If denied, you will receive an adverse action letter with an explanation for the particular reason(s) for the denial.

If you have been denied a PLUS loan, you still have a couple of options you can pursue to pay for your child’s education.

• Get a cosigner. If you are denied PLUS, you can have someone other than the student endorse (cosign) your loan.  An endorser becomes financially obligated to repay the loan if you cannot.  Most parents turn to another family member to act as an endorser, but you are not limited to having a family member serve in this role.
•  File an appeal. If you have extenuating circumstances that led to adverse credit and you can document it, you can request reconsideration.  Approval upon reconsideration is at the sole discretion of the U.S. Department of Education.
•  Ask for additional unsub. If you cannot get someone to endorse your loan or do not have extenuating circumstances, the student may be able to borrow additional funds through the Direct Unsubsidized Student Loan program.  The student will need to contact the financial aid office at their school to determine the correct steps to take to make this request. Freshmen and Sophomores may borrow up to an additional $4,000. Juniors and Seniors may borrow up to $5,000. The school will determine the amount based on how much room is left in the student’s budget (COA minus other aid including loans).
•  Consider borrowing against other assets. If you were using PLUS as a way to avoid dipping into retirement funds or home equity, those may also be options  you could pursue.  However, we strongly encourage you to seek the guidance of a professional should you move forward with this option.
• Seek light elsewhere. If all else fails, consider a less expensive alternative or, in the worst case, defer enrollment for a year and work on a budget and plan that includes working and saving toward paying tuition or resolving credit issues.

• Get a cosigner. If you are denied PLUS, you can have someone other than the student endorse (cosign) your loan.  An endorser becomes financially obligated to repay the loan if you cannot.  Most parents turn to another family member to act as an endorser, but you are not limited to having a family member serve in this role.
•  File an appeal. If you have extenuating circumstances that led to adverse credit and you can document it, you can request reconsideration.  Approval upon reconsideration is at the sole discretion of the U.S. Department of Education.
•  Ask for additional unsub. If you cannot get someone to endorse your loan or do not have extenuating circumstances, the student may be able to borrow additional funds through the Direct Unsubsidized Student Loan program.  The student will need to contact the financial aid office at their school to determine the correct steps to take to make this request. Freshmen and Sophomores may borrow up to an additional $4,000. Juniors and Seniors may borrow up to $5,000. The school will determine the amount based on how much room is left in the student’s budget (COA minus other aid including loans).
•  Consider borrowing against other assets. If you were using PLUS as a way to avoid dipping into retirement funds or home equity, those may also be options  you could pursue.  However, we strongly encourage you to seek the guidance of a professional should you move forward with this option.
• Seek light elsewhere. If all else fails, consider a less expensive alternative or, in the worst case, defer enrollment for a year and work on a budget and plan that includes working and saving toward paying tuition or resolving credit issues.

Whenever you borrow, remember to borrow only what you truly need.  Education loans, in most cases, cannot be discharged in bankruptcy and there are expensive consequences for failing to repay.

Are you wondering on how to remove a cosigner from a student loan? With the rising cost of college tuition, more students are turning to private student loans to help bridge the gap between what is offered through financial aid and what they can pay out of pocket and their actual college costs.

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Unfortunately, many young people have a limited credit and employment history, which means they will be unable to secure a private student loan on their own. In general, most lenders require students to have a credit worthy cosigner before they will be approved for financing. If a cosigner no longer wants to be responsible for a student loan, here are ways on how to remove a cosigner through a student loan cosigner release. 

How to Remove a Cosigner from a Student Loan

This person doesn’t necessarily need to be related to the borrower (student), but parents and other family members often step up to help out. But, being a cosigner can be risky. If the borrower fails to make payments, the cosigner will be legally obligated to repay the debt. There may even be some risk for the borrower, as well.

For example, should the cosigner die or file for bankruptcy before the loan is paid in full, the student loan servicer may place the loan in default and demand that the balance be paid in full, even if all payments have been made on time. Plus, removing a cosigner from a private student loan is not always an easy process. There are two primary ways a cosigner can be freed of their obligations under the promissory note they signed.

Student Loan Cosigner Release

Many banks and lenders offer cosigners the opportunity to be released from a private student loan, but borrowers need to be sure the option is available before consummating the loan. Those that do offer this escape clause typically require borrowers to make a minimum number of consecutive, on-time payments (usually between 24 and 48 months).

Borrowers must also provide evidence that they have sufficient monthly income to cover the payments, and generally must submit to another credit check.

Most lenders provide a form that must be completed, as well. If a borrower already has a taken a loan that was cosigned by another individual, he/she will need to contact the loan’s service to find out if obtaining a release for the cosigner is an available option and, if so, what steps need to be taken for the cosigner to be removed from the loan.

Refinance/Consolidation

For those who do not have the option of obtaining a cosigner release, refinancing or consolidating their  loans may be the only way to remove a cosigner from his/her obligation. Borrowers will need to have a good credit history, stable employment, and enough income to cover the monthly payments on their own in order to refinance or consolidate their loans.

Basically, this allows borrowers to pay off their previous debt and releases cosigners from any further obligation. The original loan will, however, remain on the cosigner’s credit history, but will indicate that the loan is closed and paid in full.

If neither of these options is available, cosigners should do their best to ensure payments are being made on time until the debt is paid in full. This may require them to even pitch in now and then, but it’s better than finding out that their credit has been ruined due to several late payments being reported to the credit bureaus, or worse, being required to pay late fees, penalties, and collection costs because the loan went into default status.

We get this question a lot about “Do student loans hurt your credit”. It’s nice to know that some borrowers and cosigners are concerned about the impact applying to multiple student loans may have on their credit. After all, our good credit allows us to finance important big ticket items like cars and homes and receive better rates on things like car insurance and credit cards.

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And, as anyone who has reviewed their credit score after applying for a loan can tell you, your score does decrease somewhat based on how recent the inquiry is. Whether it’s an auto loan or a student loan, credit scores are affected by inquiries. Fair Isaac, the company behind the FICO score, has a pretty good explanation about how borrowers should approach the problem and we’ll show you if student loans do hurt your credit.

Multiple Credit Inquiries for Student Loans

According to Fair Isaac, multiple inquiries for student loans over a period of no more than 45 days will have the same impact as a single inquiry.  Your credit score may or may not be impacted by a single credit inquiry and depends mainly on your characteristics of your credit profile. 

When calculating your score, the important distinction is whether you are “rate shopping” or opening multiple new lines of credit.

The way in which they determine this important difference is to look at the time frame in which the inquiries occur. If they are spread over a longer period of time, it may appear that the purpose of the inquiries is to open multiple accounts. If the inquiries occur over a relatively short period of time, it will look more like shopping for the best rate.

When comparing your private student loan options on our site, you may be tempted to go with the lender that offers the lowest “as low as” rate. If you and your cosigner have excellent credit, that may be good enough. However, if you are unsure, you should apply for multiple student loans to compare the final rates and terms offered by the lenders from which you receive approvals.

To ensure the impact on credit scores is kept to a minimum, Fair Isaac recommends doing your rate shopping over a concentrated period of time. While they recommend doing this over no more than a 45 day period, it would be better to be on the safe side and complete your applications as closely together as you can.

Since most undergraduate and many graduate student borrowers will need a cosigner in order to be approved for a private student loan, it will be important to coordinate closely with the cosigner to ensure both the borrower and cosigner complete their portions of the student loan application in a timely manner.

Shopping for the best rates is what we’re all about here at Education Connection. Compare your student loan options and select one or more loan programs. When you are ready, coordinate with your cosigner during the application process and rest easy knowing your credit score won’t take a hit that’s out of proportion to a normal credit inquiry.

Debt in America is not a new thing. In many ways, it has grown almost all years, meaning that consumers have more debt now than they did just a few years ago. Understanding the average debt in America may help provide some insight into the ways you may be able to work to reduce what you owe, providing the potential for financial freedom.

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What Is the Average Debt in America Per Household?

The average amount of debt per household in the U.S. was $104,215 in 2023, according to a report conducted by Experian. That includes mortgages and vehicle loans. It is an increase of 3.4% over the previous year. The average debt also includes any loans and credit cards a person has. This often lumps student loans into the mix as well.

Another way to consider how much debt Americans have is to consider the amount of overall debt owed by all Americans. According to the Federal Reserve Bank of New York, in 2023, household debt across the county rose to $17.7 trillion. This includes mortgage debt as well as non housing balances. Of that, about $17.5 trillion in household debt, such as mortgage debt.

Overall, reports indicate that 340 million Americans have some type of debt, including mortgage and car loans. The Urban Institute notes that 64 million Americans have at least some credit card debt.

Why is Debt on the Rise in the U.S.?

There are many potential reasons why debt continues to increase. According to the Federal Reserve, a large amount of the debt consumers have is due to an increase in mortgage balances, thanks to the purchase of homes that cost more now than they did just a few years ago. However, it may also be due to the increase in inflation, which has reached a 40 year high in 2022, which means that many consumers are spending a lot more than they did before to maintain the same standards of living.

How Much Student Loan Debt Do Americans Have?

According to a report from Experian, the average consumer student loan was $38,787 in 2023. That decreased by -0.6% in 2020 from $38,792. According to White House data, the average student who leaves college with an undergraduate degree program has almost $25,000 in debt.

One of the reasons student loan debt did not increase as rapidly from 2020 to 2021 as it did in prior years is that the U.S. Federal Government put a pause on federal student loan repayment and interest rates. That, along with the hold on collections activity on those student loans, created a bit of a break for consumers on increasing student loan debt. However, for those individuals that did not pay down their debt during that break, it continues to be a component of their ongoing overall debt.

Why Is Student Loan Debt So High in the U.S.?

The cost of higher education continues to rise. According to White House information, the cost of both a four year private and a four year public school has tripled from 1980 through 2022. While many students may have benefited from Pell Grants, which used to cover as much as 80% of those costs, that type of financial aid only covers about a third of the cost of higher education now. Financial aid may be available to those who qualify. That means more students are paying out of pocket or through third party loans to cover their overall costs.

Will Student Loan Debt Forgiveness Help with Debt?

The Student Debt Relief Plan provides loan forgiveness for qualified borrowers of up to $20,000. The program may help some families to see relief from debt up to the amount of debt forgiven. The amount may differ for each student.

How Many People Have Student Loans?

The White House notes that there are more than 45 million student loan borrowers in the U.S. That may account for both those who just left school and those who have been out of school for a long time. The reports also indicate that, of those who have student loans, about 16% of them are in default. That includes about a third of all senior citizens who still have student loan debt that they have not repaid.

Consider a few key figures:

• 45 million people have student loans in the U.S.
• About 16% of all student loan borrowers are in default
• About 1/3 of all senior citizens still carry student loan debt
• The typical Black borrower still owes 95% of their student loans 25 years after they graduate
• About 66% of people who have a Pell Grant come from a family that earned under $30,000 per year.

What Type of Debt Do Americans Owe?

There is a wide range of debt types that Americans owe. They commonly include mortgage loans, credit card debt, student loans, and vehicle debts. That is a combination of secured and unsecured debt that’s impacting monthly budgets for many of today’s consumers.

Take a look at how much debt the average consumer had in 2023, according to the Experian data:

• Mortgage Debt: $244,498
• Home equity loans or lines of credit: $42,139
• Student loans: $38,787
• Vehicle loans and leases: $23,792
• Credit card debt: $6,501
• Personal loans: $19,402

Americans owe a wide range of debt types, and having various forms of debt is not in itself a bad thing. However, those with mounting debt could struggle to continue to make payments.

How Much Debt do People Have Compared to Income?

Using just a dollar amount to represent the amount of debt a household has does not necessarily mean it is unaffordable. Those with a higher debt to income ratio, though, may have more of a struggle to combat. According to data from the Federal Reserve Bank of New York, In 2021, the overall debt to annual income ratio was 145%, which means that consumers had 145% more debt than they had income.

What Is Considered a Normal Level of Debt for Households?

The optimal situation is that consumers do not carry debt but instead pay off what they borrow each month. However, that is not always the case. There is no specific feature considered normal debt levels. However, the Federal Housing Association recommends having debt, including mortgage payments, under 43% of total income.

As noted by the Consumer Financial Protection Bureau, lenders set their own expectations for debt to income ratios. Some may have a significantly higher threshold than others. In general, the lower this figure is, the more funds a consumer has to manage their monthly expenses.

Average Debt by Income Percentile

There are many ways to consider how much debt Americans have. One way to consider this is to look at how much debt families have compared to their income. The Survey of Consumer Finances provides some insight into this. It looks at the amount of debt based on the net worth percentile. It found that the amount of debt a person has increases based on their net worth.

Here is a look at how much debt people have based on their income:

• Those who have less than 25% of their net worth in debt, the average debt was $66,940.
• For those who have between 25% and 49.9% of their net worth in debt, the average debt was $89,070.
• For those who have between 50% and 74.9% of their net worth in debt, their average debt was $132,520.
• For those who have been 75% and 89.9% of their net worth in debt, the average debt was $412,650.

Which States Have the Lowest Debt and the Highest Debt?

There are some states with lower household debt than others. Debt amounts range widely throughout the U.S. The states with the least amount of debt include:

• Mississippi
• West Virginia
• Kentucky
• Arkansas
• Ohio

Some students have a higher amount of debt than others. The states with the highest amount of debt include:

• District of Columbia
• Colorado
• Hawaii
• California
• Washington

Are There Americans That Live Debt Free?

Without a doubt, there are many people throughout the U.S. that do not carry debt. That means they do not have credit card debt or even a mortgage. The number of people who do not have debt changes each year. However, the Experian study indicated that under 25% of all American homes are living without debt. That does not include people who only have a mortgage and no other debt.

What to Do If You Need Help with Debt

Many people who have debt struggle to make payments each month on what they owe. This is financially taxing and may be hard to overcome. There may be some resources to help you.

Student loan forgiveness

If you have student loan debt, learn more about the numerous student loan forgiveness programs that are available. You may do that at the Department of Education website. It may be possible to earn debt forgiveness, discharge, or cancellation of your debts.

Student loan defaults

If you have debt that is in default from student loans, The Federal Student Aid department at the U.S. Department of Education offers insight into what your legal options may be.

Student loan forbearance

It may also be beneficial to consider student loan forbearance. This may allow you to stop making payments for a short period of time. You may learn more about forbearance at the Department of Education website as well.

Other debt help

More information on repaying your debt is available at USA.gov. You may also find a wide range of debt supportive tools and education at the Consumer Financial Protection Bureau.

With a competitive job market, many people are wondering whether it is the perfect time to attend college. These students are unsure about present and future job prospects along with rising student debt. Also, you may not presently have a job. So you are unsure if you may be eligible for student loans without a job? Learn more about how to receive a student loan without a job.

Can You Get Student Loans Without a Job?

Getting a student loan without a job may be possible when you have a cosigner. A cosigner is someone who may be willing to make your payments. Private lenders will accept this payment arrangement. They are willing take on the financial risk when two people make payments. The recent COVID 19 pandemic has forced many businesses to close and furlough staff. This situation has forced students to worry about paying off their student loan debt. It may also force some students to postpone their college courses until the economy improves.

The U. S. Bureau of Labor Statistics conducted an student unemployment study in January 2020. Unemployed high school graduates made up 3.8 percent of the study. College graduates had a 2.9 unemployment rate during the same month. With these worries, students wonder how they may pay for their college expenses. Student loans without a job could fill in the gaps or pay the entire costs. Students may seek a loan from a private lender. You may also be eligible for federal aid if you qualify. Private loan lenders may offer student loans even if you’re unemployed or if you have bad credit history. Financial aid may be available to those who qualify.

How Do I Qualify for Student Loans Without a Job?

One way to qualify is to have a cosigner. Private lenders take into consideration a person’s employment history and credit history. This information allows lenders to figure out the amount of the loan. A cosigner is anyone who meets the eligibility criteria for the student loans without a job. The cosigner may be your parents, grandparents, or another family member. It may also be a spouse or family friend. The cosigner typically have to meet the following criteria:

• Good credit score of 600 or higher
• Steady income (8% to 10% of discretionary income to make monthly loan payments)
• Favorable 15% or less debt to income ratio

Income minimum limits and debt to income ratios may vary between lenders. You may need a cosigner if you don’t have a job. Ensure that the cosigner is someone that you trust.

Can You Get Federal Student Loans and Private Student Loans Without a Job?

Both private and federal aid lenders may provide student loans to unemployed students. You should double check if you meet the eligibility requirements of each lender. 

What Federal Student Loans May You Receive Without a Job?

U.S. Department of Education will not review your credit report. The organization will also not check income history. They provide Stafford loans based on financial need. You also typically don’t need a cosigner. The only exception to this rule is if you plan to take out a Direct Plus loan with poor or no credit history. In these instances, you may need to have an endorser, which is similar to a cosigner.

Types of federal student loans that you may be eligible for if you don’t have a job include:

• Direct Subsidized Loans: A federal student loan for undergraduate students. You may have to show financial need. The federal government will pay the fixed interest rate for the life of the loan.
• Direct Unsubsidized Loans: A federal student loan for undergraduate and graduate students. You do not need to prove financial need. This federal student loan usually has fixed interest rates for the life of the loan.

Federal student loans typically have lower interest rates. This option also provides more variable payment options than private loans. You need to fill out a free application for federal student aid (FAFSA). Then you may send it to the eligible financial institution. The eligible financial institution may determine the amount of the federal loans.

What Private Student Loans Are Offered to Unemployed Students?

Private student loans may be available for unemployed students. You may need to have a cosigner to receive the loan. Citizens Bank and Sallie Mae may provide student loans. You may also seek out financial loans from a credit union. Private lenders may check your credit history and employment history for loan eligibility.

Other private lenders may check your future income potential instead of doing a credit check. This factor occurs when you don’t have a credit history or a co signor. Lenders understand that you may find employment after college. In this instance, you may be able to obtain one and submit a loan application.

How Do I Repay Student Loans Without a Job?

You may have to repay the personal loan using the funds from a savings account. The cosigner may also make monthly payments for you during your unemployment. Then you can take over the remaining loan amount or repay the cosigner. You could ask for forbearance or deferment for federal student loans. Forbearance may suspend your federal loan payments. The interest will still accrue on the loan as you will need to pay it later. Deferred federal loans will not accrue interest.

You may also qualify for loan forgiveness programs or an income driven repayment plan for federal loans. There might be less private student loan repayment options for unemployed students. Some student loan lenders may offer unemployment protection or economic hardship forbearance. You may check with specific loan servicers and student loan options. They may inform you about the length of their repayment term’s grace period. Also, don’t forget to check the repayment terms in the loan agreement which has the contracted interest rate. 

• Loan Forgiveness Programs: Loan forgiveness programs may forgive the remaining loan amount. You may have to make a certain number of previous payments to qualify. Private loan providers typically do not offer loan forgiveness programs. Federal loan forgiveness programs include the Public Service Loan Forgiveness Program.
• Income driven Repayment Plan: An affordable payment program based on your income and family size. The PAYE plan applies to federal loans. Sallie Mae offers a $25 payment option while you’re in school and during the grace period.
• Unemployment Protection/Economic Hardship Forbearance Programs: Some private lenders may offer deferment or forbearance programs. They’re available if you may experience unemployment or economic hardships. The Citizen’s Bank Student Loan offers deferment options. They may defer interest and payments for 6 months after graduation.

What Other Options May Help Pay for College?

You may try to pursue other financial aid options. Grants and scholarships typically do not need you to pay back the funds if you graduate. Yet, certain grants, such as a Pell Grant, may need repayment if you drop out of college. Other options may include:

• Waiting to go to college until after finding a job
• Placing the extra money into a savings bank account until you have enough for college
• Obtaining a part time job, either online or at a brick and mortar establishment

The pandemic has caused increased economic uncertainty on a global scale. Many students are reconsidering their career options right now. You may select the loan options that best fit your current job goals. Then you could receive the desired degree at a great college.

Reporting Assets on the FAFSA

The FAFSA requires you complete sections regarding your family’s assets and net worth of investments. Many families are confused about what they should and should not include when responding to these questions. Here’s a simple breakdown of what you should and should not include.

What are Student Assets on FAFSA? What are Parent Assets on FAFSA?

Cash, Savings & Checking Account Balances

When asked to list your (and your spouse if applicable) and your parents’ (if applicable) current cash, savings, and checking account balances…DO respond with the combined amounts as of the date you are filing the FAFSA.  These cover parents assets on FAFSA. 

They ask you to report cash because some families actually keep sizable amounts of cash in safe deposit boxes or otherwise outside of banks.

Net Worth of Investments – Considered Assets

This is where the FAFSA gets tricky and sometimes confusing. DO include the following investments:

• Real estate other than the home you live in
• UGMA and UTMA accounts
• Money market funds
• Mutual funds
• Certificates of deposit (CD’s)
• Stocks
• Stock options
• Bonds
• Other securities
• Installment and land sale contracts including mortgages held
• Commodities investments (gold, silver, etc)
• Qualified educational benefits or education savings accounts such as Coverdell savings accounts, 529 college savings plans, the refund value of 529 prepaid tuition plans

DON’T include these investments as assets on the FAFSA:

• The equity available in the home you live in
• The value of life insurance
• The value of retirement plans such as 401k plans, pension funds, annuities, non-education IRAs, Keogh plans, UGMA and UTMA accounts for which you are the custodian but not the owner

You will also be asked about the value of your businesses and investment farms. Business and/or investment farm value includes the market value of land, buildings, machinery, equipment, inventory, etc. However, business/farm value does not include the value of a small business your family owns and controls more than 50% if that business has fewer than 100 full time or full time equivalent employees.

Also, the value of a family farm does not include a family farm you (your spouse and/or your parents) live on and operate.

Remember also that the FAFSA is asking for net worth of investments–the value of the investments minus any debt owed against them. Debt here means only debt owed against a particular investment or in the case of a business or farm where the business/farm was used as collateral to secure the debt.

Can DACA Students Get Scholarships?

If you are a DACA grad student, there are potential scholarships available with varying eligibility requirements. Some Graduate Scholarships for DACA Students may not have citizenship prerequisites and could be open to Undocumented or Eligible Non-Citizens (as defined by FAFSA). 

Scholarships for DACA grad students vary in dollar amounts. Some may offset the cost of tuition and fees. While others may cover expenses like food, insurance, books and travel. 

Unlike a loan, scholarships usually don’t require repayment if you fulfill their terms, and a substantial scholarship could help you cover the expenses of pursuing a master’s degree or PhD. 

To be able to apply for a scholarship as a DACA grad student, you need to meet the criteria. These vary from each college and grad schools as well as from each state and local source.

9 Common Criteria for Scholarships that DACA Graduate Students May Need

As a DACA student, your status may not be the only thing you need to show. When you apply for a scholarship, you may need some (or all) of the these to qualify. 

• Grades – GPA range
• Leadership skills
• Volunteer service 
• Goal to pursue a master’s degree or PhD in a certain field 
• Membership in an association
• Strong writing skills 
• Work history related to your major 
• Being a resident of a certain state 
• Financial need  

3 Types of Scholarships for DACA Graduate Students

There are three main kinds of grad scholarships for DACA students. Need based, merit based and contest scholarships. 

Need based scholarships assess financial need. They may still look at a student from all sides. But preferred students will show a desire to go to grad school but also a lack of money.  

Merit scholarships may place more weight on your academic achievement or talent. They may also look at your volunteer service background.  

Contests are another way for DACA students to fund grad school. These often ask you to sign up by making an account. You might enter a few at once to improve your odds. 

One example is ScholarshipPoints. Applicants complete a student profile which asks for name, email, birthday and grade level. This is all you have to do to enter for the $2,500 prize.     

Winning a scholarship contest may help with costs related to getting your grad degree. But, they may not be enough to pay the entire tuition bill.  

As an example, the Get Schooled No Essay Scholarship is a $2,000 award.  

If this is the case, you may need to also get a small loan. Luckily, as a DACA grad student there are borrowers to turn to. MPower Financing is one such option. 

Why Consider Graduate Scholarships for DACA Students? 

About 690,000 people have Deferred Action for Childhood Arrivals status. The average age of “Dreamers” enrolled in DACA is 24 year. About a quarter (24%) are ages 26 to 30, while one in ten (11%) are ages 31 to 36.  

Almost half (45%) of current DACA recipients live in two states: California (29%) and Texas (16%). Illinois (5%), New York (5%), Florida (4%) and Arizona (4%) also have pretty big DACA populations. 

Without scholarships, DACA students may have a hard time being able to pay for grad school. These students do not qualify for federal aid or loans. But scholarships may be easier to find in some states than others. 

There are at least 19 states where DACA students may receive in state tuition. Of these, only some states offer state grants to these students. Those states are California, Colorado, Minnesota, New Mexico, Oregon, Texas and Washington 

Other states make these students pay the same tuition as an international student. These are Alabama, South Carolina, and Georgia. Dreamers in these locations cannot access in state tuition. 

12 Scholarships for DACA Graduate Students for 2024-2025

Are you a DACA student who wants to go to grad school? You may be eligible for state or school financial aid and private scholarships. To get started, check out these 12 scholarships for DACA grad students for 2024.

Dream.US National Scholarship

Undocumented immigrant students under 16 can apply for the Dream.US National Scholarship. It offers up to $33,000 for a bachelor’s degree and is open to those with or without DACA or TPS status. Don’t miss this chance to pursue higher education!

Amount: awards worth up to $8,250
Deadline: Spring of 2025
Requirements: High school seniors and college underclassmen with a minimum GPA of 2.5. Other categories include low-income and immigrant students.  

Dream.US Opportunity Scholarship

Undocumented immigrant students, arrived before 16, may be eligible for the Dream.US Opportunity Scholarship! Open to high school seniors/graduates in locked-out states, offering up to $80,000 for a bachelor’s degree at Opportunity Partner Colleges. Apply now!

Amount: awards worth up to $20,000
Deadline: January 2024
Requirements: High school seniors & college freshmen in specific states with DACA status, minimum GPA of 2.8, low income, and immigrants. States: AL, AK, AR, GA, ID, IN, IA, LA, ME, MA, MS, MO, NH, NC, ND, OH, SC, SD, WV, WI. 

National Association of Hispanic Journalist Scholarships

The NAHJ supports professional growth of Hispanics in the news industry. NAHJ scholarship opportunities range from $1,500 to $10,000. They are open to both undergrad and grad students.   

Amount: $1,500 – $10,000
Deadline: February
Requirements: To be eligible, one must be going to school in the United States and Puerto Rico. Preferred applicants also have at least a 3.0 GPA. Preferred career paths are English or Spanish language print, broadcast, digital or photo journalism. 

Maria Elina Salinas Scholarship – $2,500   

Students applying for this scholarship must submit their essay in Spanish. Preferred applicants must show a strong intent to become a Spanish language journalist. 

eQuality Nursing Scholarships 

Each year, eQuality Scholarship Collaborative awards scholarships. In the year 2024, scholarships are being offered to four categories of students, each with unique eligibility criteria. If you have any doubts about your eligibility, feel free to reach out to them via email before proceeding with the application process or deciding against applying. 

Amount: $6,000
Deadline: Scholarship will resume in the fall
Requirements: Applicants must be a resident of northern or central CA. But may study in other places (there’s a list of approved sites). They must also be enrolled by the interview date and in good standing. Master’s programs with a BA/BS in a field other than nursing are eligible. RN re entry and RN to BSN or MSN programs are not eligible. 

Simplr AI and Technology Scholarship

Simplr is a Silicon Valley start-up involved in machine learning and AI. They offer a $7,500 scholarship award as a way to give back to the community.  

Amount: $7,500
Deadline: December 31
Requirements: Applicants can be pursuing an undergrad or grad degree in an accepted major. Computer Science (CS), Math, IT. Or is attending or will attend law school. Criteria include merit and financial need. Applicants must submit a winning essay showing their passion for one of a few topics. AI, the Internet of Things (IoT), Block chain tech and Intellectual Property (IP) law.    

MPower Global Citizen Scholarship 

The MPOWER Global Citizen Scholarships are available through MPower Financing. These scholarships support DACA and international students at partner schools.  

The scholarship is open to all international and DACA students, regardless of whether they are MPOWER borrowers, and aims to support the diverse experiences of international students. 

Amount: $10,000
Deadline: July 31, 2024
Requirements: You do not need to be a borrower to apply. The form asks prompted questions about goals and education history and includes a longer essay. 

MPower Women in STEM Scholarship 

The Women in STEM Scholarship is available to those planning to study STEM in the U.S. or Canada with legal permission to do so. This scholarship, offered by MPOWER Financing, aims to support women in STEM by providing up to $6,000 annually to help reduce financial barriers to international education. 

Amount: $6,000
Deadline: June 30, 2024
Requirements: College and graduate students with DACA status, particularly women, pursuing degrees in computer science, education, engineering, electrical engineering, biology, math, or healthcare are eligible for the scholarship.  

Prospanica Foundation Scholarships  

If you are a Hispanic/Latino student enrolled in a U.S. undergraduate or graduate business program, consider applying for the Prospanica Foundation Scholarships! Each year, eligible applicants who are Prospanica members can receive awards of up to $5,000. The scholarships have different criteria and award amounts, so check the FAQ for more details. Prospanica is a business-oriented organization dedicated to empowering and enabling Hispanic professionals to reach their educational and career goals. If you support their mission and need financial assistance for your education, we encourage you to apply! 

Amount: awards worth up to $5,000
Deadline: April 2024
Requirements: College students of Hispanic/Latino heritage, who are US Citizens, Permanent Residents, or DACA recipients, with a minimum GPA of 2.8, and pursuing an academic interest in Business are eligible for the Prospanica Foundation Scholarships. 

Ford Foundation Predoctoral Fellowship

The Ford Foundation Predoctoral Fellowship is available for academically outstanding students pursuing a research-based Ph.D. or Sc.D. program in the U.S., with a career goal in teaching and research at the university level. The fellowship, offered by The National Academies of Science, Engineering, and Medicine, grants $9,000 awards to support graduate studies for aspiring educators passionate about teaching. 

Amount: $9,000
Deadline: Resume Next School Year 
Requirements: Graduate students with an academic interest in Education or Social Science and holding US citizenship, Permanent Resident status, or DACA are eligible for this scholarship.

Davis Putter Scholarship 

The Davis Putter Scholarship Fund aids those who work to advance social and economic justice. The largest grant is $15,000 per year.   

A complete application includes a 1000 word essay that details progressive social activity. You must also provide two letters of recommendation, transcripts and show financial need.  

Amount: up to $15,000
Deadline: April 1
Requirements: Preferred applicants to these need based scholarships are student activists. Recent awards went to students active in efforts against racism, sexism, and homophobia. To apply, you need to be a current grad student or enrolled in a trade or technical program.  
 

American Hotel and Lodging Educational Foundation Scholarships 

AHLEF presents a range of scholarship opportunities annually, with a total of nine programs. These scholarships offer generous values, some up to $7,500. The recipients are students who are currently pursuing bachelor’s or graduate degrees in hospitality-related fields. For the upcoming year, AHLEF has allocated $1.3 million in scholarships, benefiting over 100 deserving recipients. 

Amount: Varies
Deadline: The deadline to apply for scholarships covering the 2024-2025 academic year are now closed, and applications are undergoing review. Stay tuned as applications for the 2025-2026 academic year will open later this fall.  
Requirements: Preferred applicants have strong grades, financial need, and relevant work history.  

Military education benefits offered under the GI Bill might help you pay for college and transition into the next phase of your life. But for many active service members or veterans, a traditional college experience isn’t the perfect fit. Online learning may better suit your lifestyle, schedule, and goals. And the good news is, online degree programs may be eligible for military education benefits.

ABOUT YOUR GI BILL BENEFITS

You may qualify for the Post-9/11 GI Bill if you have at least 90 days of aggregate active duty service following September 10, 2001, and you are still on active duty; if you are an honorably discharged veteran; or if you were discharged with a service-connected disability after at least 30 days of service.

The Montgomery GI Bill (MGIB) may be available to active duty military members or selected reservists. In the Montgomery GI Bill Active Duty (MGIB-AD) program, service members must pay $100 a month for twelve months and complete a minimum service obligation. In the Montgomery GI Selected Reserve (MGIB-SR) program, the VA makes monthly payments toward your benefits.

Both the Post-9/11 and Montgomery GI Bill programs may be used to pursue a variety of educational paths. These include college degree and certificate programs, vocational and technical courses, and even online or correspondence courses.

Check out our chart at the bottom of this article, to compare military education benefits programs you may qualify for!

HOW TO USE GI BILL FOR ONLINE SCHOOLS AND PROGRAMS

Wondering how to use your VA online school benefits? Actually, using the GI bill for online schools isn’t any different from using these benefits at a traditional college…as long as your school and program are eligible.

ACCORDING TO THE U.S. DEPARTMENT OF VETERANS AFFAIRS, YOU SHOULD FOLLOW THESE STEPS WHEN APPLYING FOR BENEFITS:

1. If You’re Ready to Apply, Do So. You can apply for VA military education benefits online, or else apply in person at your regional VA office. You can also call 1-888-GI BILL-1 (888-442-4551) to have an application mailed to you.
2. If You Have Questions About Your Benefits, Talk to Someone. You can consult with the VA Certifying Official at your school of choice, to learn more about using your military education benefits. This person is usually in the Registrar’s or Financial Aid office. If you plan to study online or at a school far from home, that’s okay. Just contact the Registrar’s or Financial Aid office by phone or email. You can also seek assistance from an employee at your regional VA office.
3. Wait for Your Claims to Be Processed. It usually takes about 30 days for VA to make a decision about your claims.

Servicemembers, veterans, and even military spouses and dependents may qualify for various military education benefits, many of which can be used to pursue an online degree program. But yes, it can get confusing. Use our handy chart to compare programs you may be eligible for. Remember to always check with The Department of Veterans Affairs to verify your eligibility and learn more about these and other programs.

LIST OF MILITARY PROGRAMS AND BENEFITS

Disclaimer: This is a private website that is not affiliated with the U.S. government, U.S. Armed Forces or Department of Veteran Affairs. U.S. government agencies have not reviewed this information. This site is not connected with any government agency. If you would like to find more information about the benefits offered by the U.S. Department of Veteran Affairs, please visit the official U.S. government web site for veterans benefits at Veterans Authority.

FIND GI BILL ONLINE SCHOOLS AND START USING YOUR MILITARY EDUCATION BENEFITS

Finding online degree programs that suit your goals, academic interests, and VA education benefits may be easier than you think. Search online for Montgomery GI Bill and post 9 11 GI Bill online classes and programs. Or, let Education Connection help match you to colleges and universities for free!

Federal loans for students offer you the chance to borrow funds for college that you must repay with interest. Often, these federal loans offer a lower interest rate and more flexible repayment terms than private student loans.

Learn all about what types of federal student loans are available to find the best option for you and don’t forget to discover grants and scholarships to help you earn free money for college.

In 2022-23, 85% of first-time, full-time degree / certificate-seeking undergraduate students were awarded financial aid. Overall, 72.3%of all undergraduates received some type of financial aid.

TYPES OF FEDERAL STUDENT LOANS

There are two main types of federal student loans:

• William D. Ford Federal Direct Loans
• Federal Perkins Loan Program

These loans have unique requirements, interest rates, and maximum awards per year, which are explained below.

WILLIAM D. FORD FEDERAL DIRECT LOANS

This is the largest federal student loan program where the U.S. Department of Education is the lender. These loans include:

1. Direct Subsidized Loans
2. Direct Unsubsidized Loans
3. Direct PLUS Loans
4. Direct Consolidation Loans

Check out the table below to learn about the differences between these loans.

FEDERAL PERKINS LOAN PROGRAM

As opposed to direct loans, which have the Department of Education as the lender, the Perkins loans are school-based loans, which means that the individual school is the lender.

These loans are offered to undergraduate and graduate students with exceptional financial need. In addition, the amount awarded depends on the amount of funds available at a particular school.

Often, the students with the greatest financial need are awarded Federal Perkins Loans.

TYPES OF FEDERAL STUDENT LOANS

PERCENTAGE OF GRADUATE STUDENTS WHO RECEIVE FINANCIAL AID

71.6% of all graduate students received some type of financial aid, including 44.2% of graduate students who took out some type of loan.

HOW TO APPLY FOR FEDERAL STUDENT LOANS

In order to apply for federal student loans, you must complete and submit a Free Application for Federal Student Aid (FAFSA). Based on these results, your college or career school will send you a financial aid letter, which may or may not include an offer of federal student loans.

This offer includes instructions on how to accept all or part of the loan. However, before you receive your loan funds, you will have to complete two steps:

• Complete entrance counseling to ensure that you understand your obligation to repay the loan
• Sign a Master Promissory Note (MPN), agreeing to the terms of the loan

As some students may not receive federal student loans as an option after completing the FAFSA, don’t forget about private student loans. While each lender and type of loan have different requirements than federal loans, private loans are available to all students.

BENEFITS OF FEDERAL STUDENT LOANS

Some of the benefits of federal student loans include:

• Interest rate on federal loans is usually lower than private student loans
• You don’t need a credit check or cosigner for most federal loans
• You don’t need to begin repaying your federal loans until you leave college or drop below half-time
• If you demonstrate financial need, you may qualify to have the government pay your interest while you are in school
• Many federal student loans offer flexible repayment plans and options to postpone your loan payments if you’re having trouble
• You may be eligible to have a portion of your federal loans forgiven if you meet certain conditions and work in certain jobs

FAFSA Application Deadline

Normally, online FAFSA applications must be submitted by midnight Central Time on June 30 of a given year. For instance, the 2023-2024 FAFSA deadline is midnight Central Time, June 30, 2025.

FEDERAL STUDENT LOANS – HOW MUCH SHOULD YOU BORROW?

Whether you’re taking out a private student loan or a federal loan, it’s important to consider the legal obligation you have to pay back then loans, so responsible borrowing is key.

Some of the things to consider when borrowing money for college:

• Understand your total amount of loans and how this will affect your future finances
• Research starting salaries in your field
• Understand the terms of your loan
• Make payments on time

Often there are flexible repayment terms for both federal loans and private student loans. This includes options such as, grace period, interest-only payments while in school, and interest rate reductions for automatic debit.

Looking for private student loans? Check out some of your options here!

Percentage of Students Stressed about paying for college

According to a 2017 study by The Princeton Review, 98% of college applicants and their parents said financial aid would be necessary to pay for college. Plus, 65% said financial aid was extremely necessary.

OTHER TYPES OF FINANCIAL AID

As the price of college tuition continues to rise understanding the types of financial aid and finding the right combination of financial aid to pay for your degree is just as important as finding the perfect program for you.

Luckily, there are plenty of other options of financial aid for you to choose from, including:

• Federal Grants
• Scholarships
• Federal Work-Study
• Private Student Loans
• Institutional Aid
• Employer Funding

All of these options mean that you don’t have to worry if you need to supplement your federal student loan offer. Discover some private student loans to find the perfect one for you.

FIND THE FINANCIAL AID PACKAGE AND FEDERAL STUDENT LOAN THAT’S PERFECT FOR YOU

Finding the right mix of financial aid is one of the key aspects of earning your degree. That’s why it’s important to consider all of your options and be sure to do your research.

A good starting point is talking to your counselor or the financial aid office at your school, both of which should have specific details for you to explore.

In the meantime, check out some of our private scholarships and find the perfect degree for you.