Responsible Borrowing

Summary

This script emphasizes the significance of financial aid in achieving educational goals, highlighting federal student loans as a viable option when grants and scholarships fall short. It advises prospective borrowers to be informed and responsible, considering factors like school fit, location, and future income when determining loan amounts. The script also stresses the importance of understanding the repayment process and maintaining communication with loan servicers, ensuring a manageable financial future post-graduation.

Takeaways

• 🎓 College or career school is crucial for future goals and there are various financial aid options available.
• 💼 A federal student loan can be a beneficial way to finance your education when other forms of aid fall short.
• 📈 It's essential to be a responsible borrower and understand the implications of taking out a loan.
• 🕒 Consider that loan repayment may extend over a decade, so take your time to make an informed decision.
• 💸 Only accept the loans you actually need, as they will have to be repaid post-graduation.
• 🔍 Conduct thorough research to ensure the school is a good fit both academically and financially.
• 📍 The cost of attendance can vary greatly depending on the school's location, with in-state and community colleges often being more affordable.
• 💼 Consider your expected future income and how loan repayments will fit into your post-graduation financial situation.
• 📝 After deciding on a school and loan amount, sign a promissory note, which is a legal agreement to repay the loan.
• 🤝 Maintain communication with your loan servicer when repayment begins, utilizing the various contact options provided.
• 💡 Being an informed and responsible borrower can lead to significant long-term benefits.

Q & A

Why is considering financial aid important for college or career school?

Financial aid is important because it can help cover the cost of education, which might be substantial and not fully covered by grants, scholarships, or work-study jobs.

What is a federal student loan and how can it help with school expenses?

A federal student loan is a type of financial aid provided by the government to assist students in paying for their education. It can help by offering funds that may not be covered by other forms of financial aid.

Why is it crucial to be a responsible borrower when taking out a federal student loan?

Being a responsible borrower is crucial because you will be required to repay the loan, possibly for over a decade, and it's important to ensure that the debt does not become a burden after graduation.

What factors should be considered when deciding how much to borrow in student loans?

When deciding how much to borrow, consider the cost of attendance, the school's location, the type of school (in-state vs. out-of-state, community college vs. university), and potential starting salaries related to your chosen career path.

How long might one have to repay student loans?

One might have to repay student loans for 10 years or more, depending on the repayment plan and the amount borrowed.

What is the significance of researching the school's location in relation to borrowing money?

The location of the school can significantly impact the amount of money needed for tuition and living expenses, with in-state schools and community colleges often being more affordable than out-of-state institutions.

Why is it recommended to only accept the loans that you need?

Accepting only the loans that you need helps to minimize debt and ensures that the repayment does not become an overwhelming financial burden post-graduation.

What is a promissory note, and why is it important to sign one when taking out a loan?

A promissory note is a legal document that outlines the terms of the loan and the borrower's commitment to repay it. It is important to sign and keep a copy as it serves as a binding agreement between the borrower and the lender.

How can a loan servicer assist borrowers during the repayment period?

A loan servicer assists borrowers by providing various communication options such as web, email, and phone contact, making the repayment process easier and more manageable.

What should one do if they have questions or need more information about student loans?

If one has questions or needs more information, they should visit StudentAid.gov, which is a resource provided by the government to help students understand and manage their financial aid.

Outlines

00:00

💼 Understanding Federal Student Loans

This paragraph emphasizes the significance of college or career school in achieving future goals and introduces federal student loans as a viable financial aid option. It highlights that while grants, work-study jobs, and scholarships can assist with educational costs, they might not fully cover expenses. The paragraph advises prospective borrowers to be informed and responsible, considering the long-term commitment of loan repayment, which could span over a decade. It suggests researching the school's fit both educationally and financially, considering the school's location and its impact on costs, and estimating future income to determine a manageable loan amount. The importance of signing a promissory note and maintaining contact with the loan servicer for repayment is also discussed. The paragraph concludes by encouraging borrowers to be informed and responsible for their financial future and directs them to StudentAid.gov for further information.

Keywords

💡Federal Student Loan

A federal student loan is a type of financial aid provided by the government to assist students in paying for their higher education. In the context of the video, it is presented as a significant option for funding education when grants, scholarships, or work-study jobs do not fully cover the costs. The script emphasizes the importance of understanding the terms and being a responsible borrower, as these loans will need to be repaid over an extended period, potentially over 10 years or more.

💡Financial Aid

Financial aid refers to the various forms of assistance, such as grants, scholarships, and loans, that are available to help students pay for their education. The video script discusses financial aid as a critical consideration when planning for college or career school, highlighting that while it can be substantial, it might not always cover the entire cost, thus necessitating additional funding like federal student loans.

💡Grant

A grant is a type of financial aid that does not need to be repaid and is typically awarded based on financial need or other criteria. The script mentions grants as one form of financial aid that can help with the cost of attending school, but it also points out that grants alone might not be sufficient, hence the consideration of other options like student loans.

💡Work-Study Job

A work-study job is a part-time employment opportunity for students that allows them to earn money to help pay for their education while also gaining work experience. The video script includes work-study jobs as one of the financial aid options that can assist in covering educational expenses, but it also implies that such jobs may not fully fund a student's needs, leading to the consideration of student loans.

💡Scholarship

A scholarship is a form of financial aid awarded to students based on various criteria such as academic achievement, talent, or community service. The script views scholarships as a helpful form of aid, but it also acknowledges that they might not cover the entire cost of education, which is why other financial options are discussed.

💡Responsible Borrower

A responsible borrower is someone who understands the terms of their loans, borrows only what is necessary, and has a plan for repayment. The video emphasizes the importance of being a responsible borrower when taking out a federal student loan, as it involves a commitment to repay the loan over many years, which can impact the borrower's future financial health.

💡Promissory Note

A promissory note is a legal document in which the borrower promises to repay a specified amount of money under specific terms. In the video, signing a promissory note is mentioned as a necessary step when taking out a federal student loan, signifying the agreement to repay the loan according to its terms.

💡Loan Servicer

A loan servicer is an organization that manages the billing and other aspects of a loan after it has been issued. The script mentions that loan servicers will facilitate communication with borrowers during the repayment period, offering various contact options to ensure borrowers can stay informed and meet their repayment obligations.

💡In-State vs. Out-of-State Schools

In-state schools refer to colleges and universities where the tuition is lower for students who are residents of that state, while out-of-state schools charge higher tuition for non-residents. The video script points out that the cost of education can vary significantly based on whether a student attends an in-state or out-of-state school, which can influence the amount of financial aid or loans needed.

💡Community Colleges

Community colleges are typically public, two-year institutions that offer associate degrees and certificate programs at a lower cost than four-year universities. The script suggests that community colleges may be a more affordable option compared to out-of-state schools, which can reduce the amount of financial aid or loans required.

💡Starting Salaries

Starting salaries refer to the initial earnings a graduate can expect in their first job after completing their education. The video script advises students to consider their future income when deciding how much to borrow for their education, as it will impact their ability to repay loans, with the suggestion that student loan payments should be a manageable portion of their post-graduation salary.

Highlights

Federal student loans can be a great way to help pay for school.

Grants, work-study jobs, or scholarships may not cover the full cost of attending school.

It's important to understand what you are getting and be a responsible borrower when taking out a federal student loan.

Consider the long-term commitment of repaying loans for 10 years or more.

Only accept the loans that you need, as you'll have to repay them once you’re out of school.

Research is essential to ensure the school is the right fit both educationally and financially.

The location of the school can significantly impact the amount of money you need to borrow.

In-state schools and community colleges may cost less than out-of-state schools.

Consider your future income when deciding how much to borrow.

Starting salaries vary greatly depending on your career path.

Your student loan payments should be a small percentage of your salary after graduation.

A promissory note is an agreement to repay your loan and should be signed and kept for your records.

Keep in touch with your loan servicer when repayment begins.

Loan servicers offer web, email, and phone contact options for repayment.

Being an informed, responsible borrower can pay off in a big way.

Visit StudentAid.gov for questions or more information.

Transcripts

College or career school is an important step in achieving your future goals,

and there are many financial aid options to consider.

Did you know that a federal student loan can be a great way to help pay for school?

After all, a grant, work-study job, or a scholarship

can be a huge help, but these forms of aid may not cover

the full cost of attending school.

So if you decide to take out a federal student loan,

it’s important to understand what you are getting and be a responsible borrower.

Getting a loan is a big decision. You might be paying your loans back

for 10 years or more, so take your time to decide.

And remember to accept only the loans that you need,

because you’ll have to repay them once you’re out of school.

Here are a few things to keep in mind when deciding how much to borrow.

Do some research: Make sure that your school is the right fit for you

both educationally and financially.

Location, location, location:

The amount of money you need to borrow can depend a lot

on where your school is located.

In-state schools and community colleges

may cost less than out-of-state schools.

And finally, getting an idea of your future income

is also important when deciding how much to borrow.

Starting salaries vary greatly depending on your career path,

so it’s worth thinking about how the amount of your loan will affect your future finances.

After all, your student loan payments should be only a small percentage

of your salary after you graduate.

Once you’ve decided on your school and figured out how much money you should borrow,

you’ll need to sign a promissory note, which is an agreement to repay your loan.

Make sure you keep a copy for your records.

If you do take out loans, you’ll need to keep in touch

with your loan servicer when repayment begins.

Your loan servicer will make this easy for you

you by offering web, e mail, and phone contact options.

If you make this investment in your future,

being an informed, responsible borrower can pay off in a big way.

If you have questions or need more information,

please visit StudentAid.gov.