Monday, February 16, 2015

Adultification IV: Student Loan Borrowing Limits

Following my learning process via Adultification II, III and the last Personal Life Update (PLU), the next thing I touched on when I called up the university financial aid office was the question of whether the loans would cover enough of the tuition and fees so that I wouldn't be on the hook for it.

So far, my loans have been all of one sort, the Stafford loan given by the US Department of Education.
When it comes to student loans, loans held by the government are non-dischargeable in bankruptcy, in contrast to private loans which are, but also unlike private loans, the terms of repayment tend to be somewhat more forgiving: you won't be required to begin repayment while you are taking courses full-time, and if your loans are subsidized, they won't even accrue interest during that time. Further, if you are too poor to pay back your loans according to the standard repayment plan (like me, with the IBR plan), you can be eligible to have your loans deferred even further based on your income. Beyond this, the government wields influence and leverage in terms of offering incentives--if you go into teaching or other public-sector careers, you can have your loans deferred, decreased, or even 'forgiven' outright. And in the worst case scenario of all, if 25 years from the date repayment was supposed to start, if you haven't paid it back, your debts are cancelled. But who wants to waste 30-some-odd years of their life just waiting for debt cancellation?
There are other federal student loans, such as the Perkins loans, and I suppose there are still others. Each kind of loan has a maximum school-year disbursement amount as well as a maximum loan ceiling. For the Stafford, the loan ceiling is $31,000 for dependent students. That happens to be almost exactly how much my total debt is as of right now.

Conveniently, the FAFSA considers you an independent when you are 24 or above. The loan limit for independents is something like $20,000 more, which would easily cover 2 years of university in-state. So it turns out that having been uncertain about what to do with myself for a little over a year had its perks.

Per-year, the Stafford loans pay out $12,000 as the maximum limit. Most in-state schools where I live don't have more than $9,000/year expenses in terms of tuition and fees. So I'm covered.

After this, the question is: can I also get need-based grants, because of my income status? And will whatever I have saved up by the Fall be enough to cover course textbooks, food, gas and insurance for 2 years while I try to figure out how to live without paying rent I can't afford?

The journey continues.

~ Rak Chazak

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