When we talk to students, we usually ask if they are taking out loans. Entirely too often students say “I don’t have loans. FAFSA is paying for everything.”
To be clear, the FAFSA not money, it’s just the application you use to get money (one of the A’s in FAFSA is “application”). Most of you should be getting the Pell Grant from filling out the FAFSA. If you are at a community college, the Pell Grant alone should be enough to cover your tuition for the semester.
If you are going to a four-year school, a private school, living on campus, and/or getting a meal plan, you school will probably offer loans to help you pay for that. You do not have to accept loans just because they are offered!
You should receive a financial aid award letter from your school. It may not be a paper letter, it may be viewable online. This letter is different than your ETV award letter!
Read your letter carefully. Subsidized loans, unsubsidized loans, and anything else with the word “loan” in it, will need to be paid back. Learn more about different types of loans here.
In the picture above, the student is being offered over $30,000 in loans for one year. If they did not read their award letter carefully, they may not even be aware that they are getting that much in loans.
If they plan on going to school for four years, they will graduate with over $120,000 in debt. A student graduating with that much debt is looking at a student loan payment of over $1,000 a month! That’s $1,000 that they can’t spend on rent, travel, clothes, or starting a family. What happens when you don’t pay your loans? It’s not pretty.
So, what should you do?
Please carefully read the award letter your school sends you. If you don’t understand it, talk to your ETV coordinator or your school’s financial aid office.
Please do not wait until after school has started and you’ve moved into your dorm to do this. You do not want to start school and then find out that you cannot afford to go there.