Failure to File FAFSA and Debt Mounts

Failure to File FAFSA and Debt Mounts

One of the major mistakes that college-bound students make is failing to fill out and submit their Free Application for Federal Student Aid. The FAFSA is every students gateway to a wide range of Federally supported grants and low cost loans. It is also used by most independent scholarship and grant sponsors to evaluate applicants, and decide financial aid awards. Students who fail to submit their FAFSA will have no alternative but to pay for their college education out of pocket, or to secure a series of high-cost private lender loans. More than 8 million high school graduates fail to fill out their FAFSA every year, don’t be one of them.

Student Debt Sabotages Graduate and PhD Seekers

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The high cost of a college education has seen a disturbing trend amongst graduate and post-graduate students. Understandably, many students are reluctant to increase their college loan debt and are dropping out of college rather than complete their graduate or post-graduate studies. It is important to remember, however, that a student’s future income potential is in direct proportion to the level of their education. While no one likes to recommend taking on more student loan debt, abandoning your graduate studies will only result in a loss of income potential. Meanwhile, you will still be responsible for the student loan debt you have already accumulated, and will be less likely to reach an income level that makes repayment suitably manageable.

Managing Debt: One Encouraging Trend

While student loan debt continues to rise across the board, managing that debt has become significantly easier. Both the Federal government and private lenders have a vested interest in seeing students fully repay and discharge their college loans. Consequently, most Federal and private loans offer a variety of repayment options designed to help borrowers better manage their outstanding debt. These may come in the form of deferments which allow the borrower to postpone repayment until after graduation when they have entered the workforce, or loan consolidation programs that allow students to combine their existing debt into one more manageable loan. Many private lenders also offer a variety of repayment options designed to match the borrower’s financial position, adjusting monthly payments according to income. These more flexible repayment options help assure that loans are repaid in full, and that student borrowers avoid defaulting on any outstanding loans.

With more than 60% of students relying on college loans to finance their education, it is clear that they play a pivotal role in keeping higher education accessible to all. The rising costs of college tuition also means that student loans are here to stay. While there are always potential pitfalls along the way, students should not forgo their college education out of a fear of accumulating student loan debt. A better education equals greater earning capacity, and students who have invested in their education will be able to reap the benefits despite their college loan debt.

Unlike Federal loans, private student loans are decided solely on the basis of credit history. This can present a problem for many college students, as they may have little or no credit history to show for themselves. Many private lenders will allow students to engage a cosigner, either a parent or a guardian with a solid credit report, in order to secure the necessary loans for college. Private student loans come at a higher cost than Federal loans. They typically have higher interest rates, application fees, penalties for early repayment, and much more restrictive repayment options. While private lender student loans help thousands of students every year find the money they need for college, they can place a significant burden on student-borrowers.

For many students, the college loan process is their first substantial financial experience. Consequently, they may not fully understand their responsibilities as borrowers, and may be unprepared to successfully manage their outstanding student loans. Defaulting on a payday loans MO student loan is never an option, and borrowers will be responsible for full repayment, plus interest, of the loans they have received.

Students are advised to pursue Federal student loans before considering any private lender loan agreements. Unfortunately, due to a lack of proper financial aid guidance, many students turn to private lender loans before exhausting all of the Federally supported financial aid opportunities. Before taking on any high cost private students loans, be sure to apply for any government sponsored financial aid programs for which you may be eligible.