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.