Online Colleges Financial Aid is Great Now, but Hard to Pay Later

OK, you aren't even sure you want to read this article, are you? Well, take it from me, a worker who makes good money yet still owes on student loans from a bachelor's degree that she completed in 1995! Student loans will haunt you your entire life if you are not careful with how you handle your online colleges financial aid! So, while there are no inexpensive online degree programs, there are ways to minimize the financial damage that a degree does to you.

Choose Free Money

When it comes to getting online colleges financial aid, always go for the free money whenever possible. Trust me - it's worth it. Free money usually means scholarships (which can be based on financial need, past educational achievements, career intentions, and more) and grants (usually in the form of the Federal Pell Grant). These types of tuition assistance are free money given to you, that you never have to pay back - the best kind!

OK, So You Need Loans

You may be surprised at how much money you can actually get through scholarships and grants. However, if this is simply not enough, then you may have to get loans. Remember to be careful with how much loans you get - resist the urge to take out the maximum amounts just because you can, then live the good life throughout school. Trust me, you do not want to play now and pay later - you will regret it.

Check the terms of all loans. Ensure that you will not have to pay them back until at least six months after graduation, to give yourself ample time to find a job and start making some money. Ensure that the interest rate will be fair - you may not realize it, but when you get loans you can choose the bank that processes the loans. So shop around and see who has the best interest rates on student loans. Remember to stick only with federally sponsored loans, do NOT get private loans. These have much higher interest rates and less favorable terms.

Pay Your Loans Back

Once you get a student loan you are stuck with it for probably ten years or more. Unlike some debt which can be discharged in bankruptcy or fall away if you avoid it long enough, student loans linger forever - they will garnish your social security check if they have to! Avoid the temptation to defer them after you graduate (that's how you get stuck with them 20 years later, like I have) - pay them off right away. Pay now; play later.

Wait, Loans Can Be Free Too?

Believe it or not, there is a way that loans can actually be free, too. Well, ok, I just wanted to get your attention - they are not really free, but can be paid at a substantially reduced rate. This is through a rather new government program called income based repayment. Let's see how this works with your online colleges financial aid.

Let's say you are in school, and you rack up $30,000 in student loans during your bachelor's degree, which in my experience is about average. Your degree was in psychology. Now, you graduate and you get a job that you love, and it pays an amazing $24,000 a year. Wow. All that work for poverty level pay, but that's about what you get with a bachelor's in psychology. But you love your job, so you keep it. You can defer your loans, which means they just build interest and get bigger, in the hopes that soon you'll make more money and pay them. You never do. When you retire, they take 20% of your already paltry social security to pay your loans. Life is terrible.

Now, let's say that all this is the same, but when you graduate, instead of deferring your loans you apply for income based repayment. Well, you make so little money that your payment is only $50 a month. That is $600 a year. You love your job, so you keep it, but your income never goes up much, and your payment is always $600 a year. Well, after 25 years you have paid $15,000 - almost half of your original loan amount, not even counting 25 years worth of interest. You know what? On the IBR program, after 25 years anything you still owe is forgiven. Gone. Bye Bye. Your online colleges financial aid is all paid for. If you are a public school teacher, this is true after just 10 years.  Trust me, stick with the Federal student loans. They will pay in the end.

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