Borrowing Money and Paying for Law School
- Welcome to Financial Aid TV's Counseling on Demand
Welcome to Financial Aid TV's Counseling On-Demand. In this session, you will view a series of short video segments. You will also be asked several questions to test your understanding of the material. Good luck!
- What is debt?
Consider this example. Imagine you borrow $1,000 at 6% interest. You will owe $60 a year in interest in addition to the amount you initially borrowed. That is because $1,000 X .06 equals $60. Imagine it takes you 5 years to repay the debt. You will owe the initial $1,000 plus the interest that accumulated each year. The cumulative interest owed could actually be a few hundred dollars. That’s quite a lot of interest to pay on an initial loan of $1,000.
- What does APR stand for?
The Annual Percentage Rate, also known as the APR, is a rate that may differ from your "advertised" interest rate. APR's take into account all fees and/or additional charges that may be associated with the money or credit you are borrowing. APR's are a good way to compare loan options and lenders.
- How much money should I be willing to borrow for college?
You should borrow prudently, which means that you should only take on an amount that you feel you can reasonably expect to pay back over time. College can be a great investment, but only if you make the most of the opportunity to learn what you need to learn to have a successful job and career path. You will need to make a good income post-college to pay back your debts.
- I can’t afford to make payments on my undergraduate loans while attending graduate school. What should I do?
When you are enrolled at least half-time in graduate school, you have the option to defer making payments on your Federal undergraduate loans. Contact your lender or servicer to request an in-school deferment.
- How can I find out who my lender and servicer are for my undergraduate loans?
The National Student Loan Data System (NSLDS) is the U.S. Department of Education’s central database for student aid. Go to http://www.nslds.ed.gov for information on loan amounts, outstanding balances, loan statuses and disbursements. Or call the Federal Student Aid Information Center toll-free at (800) 4-FED-AID.
- I have loans from undergraduate school. Do I need to complete an entrance counseling session again?
Federal regulations require that all students who borrow through the Federal Direct Unsubsidized and Federal Graduate PLUS Loan Programs must complete an entrance counseling session. The purpose of loan counseling is to provide information concerning the Federal Direct Unsubsidized and Federal Graduate PLUS Loans, explain your rights and responsibilities as a student loan borrower and provide other helpful information. Be sure to check with your Financial Aid office regarding entrance counseling requirements.
- What is the difference between a Federal Direct Unsubsidized loan and a Grad PLUS Loan?
What is the difference between a Federal Direct Unsubsidized loan and a Grad PLUS Loan? The main difference between a Federal Direct Unsubsidized loan and a Grad PLUS loan is that the Grad PLUS loan requires a credit check while the Federal Direct Unsubsidized loan does not. Federal Direct Unsubsidized loans have annual loan limits while Grad PLUS loans do not. Under the Grad Plus loan program you may borrow up to your total cost of attendance minus any other aid you receive. The current interest rate on the Federal Direct Unsubsidized loan is 6.8%, and the Grad PLUS Loan interest rate is 7.9%.
- Do you have any suggestions for what I should be doing now to prepare myself for repaying my loans?
• Prepare a realistic budget and stick to it • Contact your lender or servicer if you have not received repayment information. Effective July 1st, 2010, all new Stafford Student Loans and PLUS Loans are Direct Loans through the US Department of Education. If you have loans prior to July 1st, 2010, you may have a bank as a lender. It is important you know who your lender is. It is your responsibility to make your payments on time. • Open all of your mail Your lender may transfer or sell your loan. It is the responsibility of the lender to notify you if such a transaction occurs. This notification is usually communicated by mail.