Students should only consider loans after exhausting all other resources such as personal savings, school payment plans, employer tuition benefits, and scholarships. The cost of higher education is an investment in yourself – the more you borrow, the higher the cost, lowering your return on investment. If you have to borrow money, apply the income tax savings, if any, as a lump sum payment toward the principal balance of your student loan.
First, do your homework. Even before looking at loans, students should research and consider costs at different universities. For example, tuition and fees at online universities vary widely, from approximately the same cost as public universities to more than twice as much. Higher cost does not necessarily mean higher quality, so be sure to understand all of the costs-tuition, books, and fees.
Another factor in your cost consideration should be the length of time you expect to take to complete your degree-the longer it takes, the more it is likely to cost. Some universities, such as WGU, combine a flat-rate tuition with a competency-based model, which allows students to advance as soon as they demonstrate mastery of course materials, making it possible for many students to accelerate their progress toward a degree, saving both time and money.
If a student needs to take out a loan, it is best to borrow only the amount needed for unmet direct costs (tuition and fees after other resources are applied), rather than borrowing the maximum amount allowed.
Not understanding the total repayment cost over the life of the loan (principal plus interest over 10 or more years).
Borrowing the annual maximum. This is a bad idea. Be frugal to optimize your return on investment. Borrow only what you need to cover the unmet direct costs (tuition and fees after other resources are applied). Live within your means and pay your indirect costs (living expenses) with job wages, savings, and investments.
Public Service Reduces Student Loan Debt
Those in public service fields find their jobs rewarding because they get the opportunity to give back to the community. But there is one reward that they may not be aware of: the Public Service Loan Forgiveness Program, or PSLF. Under this program, graduates who work for qualified employers on a full-time basis are able to have their loans forgiven after making 120 consecutive payments.
10 Loan Forgiveness Facts You Need to Know
Private not-for-profit organizations that provide services to the public, such as emergency management, law enforcement, education, library, and public health services
For PSLF purposes, full-time employment is defined by whatever the employer worldpaydayloans.com/payday-loans-ny/saranac-lake/ considers that status to be, or 30 hours per week, whichever is greater.
Any payments that are made after ount on the bill are qualifying payments. In addition, they must be made no later than 15 days after the due date. Only payments made while the borrower is working full-time at the qualified employer will be considered.
Students who are enrolled in the Income Contingent Repayment Plan, the Income Based Repayment (IBR) Plan, and the Pay As You Earn Repayment Plan are making qualifying payments.
Income does not affect someone’s ability to benefit from PSLF. However, income does influence the monthly payments that students make if they participate in a qualified payment plan.
The Internal Revenue Service does not consider loans forgiven through the PSLF to be income. Therefore, the amount forgiven on the loan is not taxable.
After making 120 qualified payments, borrowers must submit a PSLF application form. They must still be working for the qualifying employer in order to have their loan balance forgiven.