When financing your college education, understanding the intricacies of student loans can be crucial. One question many students ask is, “Can you get a student loan for more than just your tuition?”
The simple answer is: yes, you can. Let’s dive into this in more detail and uncover five insider secrets about the world of student loans.
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1. Cost of Attendance (COA) Includes More than Just Tuition
The first thing to understand is that educational institutions calculate the Cost of Attendance (COA) as more than just the tuition. COA includes:
Tuition and fees
Room and board
Books and supplies
Student loans can be taken out up to the full amount of the COA, meaning you’re potentially borrowing for not just tuition but also for these other costs.
2. The Right Loan Matters: Federal vs. Private
The type of loan you’re considering is vital.
Federal Loans: The U.S. Department of Education offers federal loans. These have limits, but they often consider the COA, not just tuition. Subsidized loans, for instance, are based on financial need and might not cover the full COA. Unsubsidized loans, while also having limits, can be taken by anyone, regardless of need, and can fill the gap between what subsidized loans cover and the COA.
Private Loans: Banks and financial institutions offer these. If you’ve maxed out your federal loans and still need more for your COA, private loans can help bridge the gap. However, they usually have higher interest rates and less favorable repayment terms.
3. Refund Checks: Excess Loan Amounts Can Be Refunded
When you borrow more than your school’s billed costs (like tuition and fees), the financial aid office will typically refund the extra amount.
This “refund check” can be used to cover other COA expenses, like books or off-campus housing. But remember, this is still borrowed money. It’s not free, and you will need to repay it.
4. Borrow Wisely: Only What You Need
Just because you can borrow up to the full COA doesn’t mean you should. Every dollar you borrow will accrue interest (unless it’s a federal subsidized loan during in-school periods).
Consider your needs carefully. Create a budget and stick to it. It’s tempting to live a little more comfortably in college, but remember that the more you borrow, the longer it might take you to achieve other financial goals post-graduation.
5. Repayment Assistance and Loan Forgiveness Programs
Here’s a secret that’s not always immediately obvious: some career paths or situations can help you get part of your loans forgiven or assist with repayments.
Public Service Loan Forgiveness (PSLF): If you work in a qualifying public service job, you might be eligible for loan forgiveness after 120 qualifying payments.
Income-Driven Repayment Plans: These can reduce your monthly payment based on your income and family size, with the possibility of loan forgiveness after 20 or 25 years.
Teaching or medical service in underserved areas: Some programs will help repay loans for those who commit to working in underserved communities.
Understanding student loans is essential to manage debt and make informed financial decisions during and after college. While you can borrow beyond tuition to cover other educational expenses, it’s crucial to be mindful of the long-term implications.
Always borrow wisely, explore all available options, and seek expert advice when in doubt.