Student Loans

Okay. SO. I am aware to go to the school I want I'll need to do a lot of student loans. It's just the reality of the situation. However I.. don't know how they work. Like.. at all really. And given my current situation I want to be sure I'm not boxing myself into hell while flustered or confused next year.

I'm currently disabled and on SSI, I am not sure when I'll be able to hold down a job yet.
I have no family input, I am not a dependent, and I'm still trying to figure out how to field scholarships and shit.
How does repayment work. How much am I able to borrow and when do I have to pay it back by.
How does Any of this work, even talking to the financial office didn't help they just told me to fill out the FAFSA and apply and that's... not answering my questions that are about me wanting to learn about this process ahead of time.

help, i'm really dumb and just want to go to art school, please explain this to me like i'm 5, none of it is sticking and it's scary and confusing because the idea of being sent to jail or something because I turn out to still be disabled in the future is lodged in my brain.

 

Okay, so you fill out the FAFSA and give it to your school.

Your school submits it to everyone they work with who gives loans, and says "hey, this person wants to attend me, can you give them a loan?" Then they get back a list of loans based both on the school, and your financial information.

The government may just up and give you some money you don't have to repay. This is a Pell Grant, and it is available to low-income students who don't have a degree yet, which it sounds like you might be. It won't be near enough to pay for everything, but it's nice!

Then your school's financial aid office makes and appointment with you, and they show you all the loans you could get, and they tell you, "This one is like this, here are the advantages and disadvantages, this other one is like this, here's how that works. Which ones do you want?" They should be able to explain everything about every loan to you, answer all your questions, and give you advice, that's their job. Then you go away and think about it, and call them with questions, and tell them which ones you want, and they have you sign something.

Unfortunately, because "student loans" is a collection of government loans and private loans and everyone qualifies for different ones, we can't tell you exactly what the rules of your loans will be. It's a terrible and disorganized mess.

For loans in general, you have to pay back more than they give you. This is true for student loans, but exactly how much more you have to pay back varies a lot with what type of loan you get. The interest rate of a loan is a measure of how much more, per year, you pay than you get.

Payments are made once a month starting after you graduate. Setting up your bank account to do it automatically is reasonably straightforward. Paying a loan off completely varies of course with how big the loan was and how big your payments are, but 10-20 years is normal.

Most people end up with more than one loan. They get one really nice loan with good rules that doesn't pay for all their degree, and then a second loan that pays for the rest. You have to make a separate payment for each loan if you have more than one.

Usually government loans suck less than loans from banks. It's possible there's some really civic-minded bank in your area that really wants to help local people go to college and gives them loans with really good rules that are easy to get, but it's not very likely. You probably want government loans.

The best government loan, if you can get it, is a Perkins loan. It sounds like you probably qualify - they're need based - but your school may not. Not all schools participate in the Perkins program. Perkins loans are repaid with monthly payments to your school starting nine months after your graduate. You can pause repayments through an annoying paperwork process if you are ill or unemployed. Unfortunately, a Perkins loan will only pay you $6k a year, so if you can get one, you probably need another loan too. Sometimes the government pays the interest on a Perkins loan, so you pay back exactly the amount they gave you, no more. Sometimes they pay some, but not all of the interest.

The most common government loan is the Stafford loan. Lots of people have one. They're easy to qualify for and they can give you a lot of money - up to $60k. Stafford loans have an "income-sensitive payment" option, which means how much you owe each month depends on your income. Useful if you're worried about disability making there be some months you don't work much. So if you're worried about that sort of thing, ask your financial aid office how to sign up for that option. I think you can also pause them if you're unemployed, like Perkins loans.

Unfortunately, it's definitely possible to get into financial holes with a Perkins or Stafford loan - I think if you pause payments for unemployment or illness, you still get more interest, so even though you can skip payments without trouble (as long as you submit a mountain of paperwork), you'll owe a little more after each pause and have to make payments for longer. If you use the Stafford loan's income-sensitive payment option, you can end up paying so little that you owe more each year, not less, because the interest will cause the amount you owe to continue to grow 5% a year or whataver.

PLUS loans are a government loan, but they kind of suck. They will lend you a huge amount of money, but their repayment terms are less flexible and humane than Stafford or Perkins loans. Avoid if you can. PLUS loans are intended for the student's parents, and the government assumes the parents are financially stable and can handle a high interest rate and strict payment schedule in the way a new graduate can't.

Bank loans also suck. There's not usually a way to pause them, skip payments, or adjust payments to your actual income. The federal government wants people to be able to be educated so they can make the country awesome or something; banks want to make money. Avoid bank loans if you can. You specifically may not even be offered any, because the bank does credit checks and if you're living independently, you may not have much of a credit record yet.

Sometimes other private groups will offer to lend you money; their terms will vary a lot. If your school itself is rich (usually fancy private schools, probably art schools aren't rich?), they might offer to give you or loan you money themselves; that's usually a pretty good deal.

If you end up with multiple types of student loan, like a lot of people, there are special government programs that will combine them into one single monthly payment. I don't know much about that, but your school's financial aid office can tell you. You might not want to do this if you get a really nice loan, like a Perkins loan with no interest, because the combination loan will be less nice. But if you end up having to take out an inflexible bank loan, switching to a government-backed combined loan might actually improve your setup.

I hope this helps?

 

that helps a lot!!

 

I have a pretty decent idea of the fedloans system, so if you need help with that, please let me know! you should be able to make a monthly payment that's spread out to cover all of your loans, but I would actually recommend focusing on repaying the highest interest loans first (that's what I did!), or breaking it up by percentage of costs—I can 100% help with that too I WILL break out the spreadsheets

 

;v; I'm barely able to keep up with school alone, and I already can't hold down a job, so combining the two would be a quick way to wedge me under a rock and stomp. I'm hopeful for the future, considering the hard work I'm putting in to get myself functional, but for now i can't hinge much on the idea just yet. later years perhaps!