Here's the Latest on Student Interest Rates and Current Refinance Rates
Starting college always comes with new challenges, but this year, students are up against a unique set of hurdles. From fully remote classes to strict social distancing rules to reduce the chances of a COVID-19 outbreak on campus, this fall semester will be anything but ordinary. And for many students, one of the biggest difficulties this year will be figuring out how to foot their college bills.
Several recent surveys have highlighted families’ financial concerns. In one, six out of 10 families reported a negative impact on their household budget as a result of the pandemic, with the number of families whose kids will need to use student loans as a way to pay college increasing from 42% in January to 53% in June.
Another early summer survey of 76,000 incoming and current college students in California found 71% reported losing some, or all, of their income due to closures or budget cuts caused by the pandemic. Almost half of them said that their living arrangements had changed, resulting in added expenses they hadn’t planned for this fall.
Concern about being unable to pay rent and other educational expenses has “added a lot of stress that is distracting me from my academic goals,” one of the survey participants said. Another stated that her mom had lost her two jobs and, as a result, her financial plans for college had changed.
If you don’t have enough money to pay college bills, or your rent, one option is to check to see if there are additional scholarships available with your financial aid office. You might have to file an official appeal for more aid.
But if there’s no money available that way, then borrowing is one of the only other options you can explore to fill the gap — even if classes already started, and you had previously declined the federal loans that were included in your financial aid package.
Jill Desjean, a policy analyst at the National Association of Student Financial Aid Administrators (NASFAA), says that if you change your mind, you can always contact your school’s financial aid office to revisit your application and accept your federal loans, as long as you are still enrolled for the academic year that the loans were pre-approved for.
If you’re considering borrowing more, here’s a refresher on federal and Parent PLUS loans, as well as private student loans and refinancing.
Federal Student Loans
If you need to borrow for college, federal student loans should be the first option you explore, as they are easy to access. They don’t require credit checks and nearly any student in good academic standing can get them. Federal loans also offer more flexible repayment options than private loans. Annual borrowing limits range between $5,500 to $12,500, depending on your school year and dependency status.
If you already maxed out federal student loans, and still need some extra cash, you can ask your parents if they’d be willing to take out a Parent PLUS loan. Parent PLUS loans have much higher limits than undergraduate loans, since your parents can borrow the equivalent of the total costs of attendance.
