Ghouls and goblins aren’t the only thing lurking around the corner this season. Big changes…
The 2022-2023 academic year is steadily approaching. Mailboxes or emails overflow with aid notification letters of students’ financial aid packages from each school listed on their Federal Application for Federal Student Aid (FAFSA). These letters indicate how much financial aid a student is eligible to receive. Part of the financial aid package includes student loans. Loan amounts vary based on your classification (ex. Freshman, sophomore, junior, or senior) and your dependency status (ex. Dependent or independent). Student loans are part of the financial aid package and are the only aid students must repay, if accepted. Therefore, you must borrow responsibly.
Borrower responsibly! What does that mean?
Well, it means borrowing what you need – don’t overborrow. Your monthly payment will be based on how much you have borrowed. Therefore, the more you borrow, the greater your payment will be. All borrowed funds must be repaid, so make sure you can afford to repay what you’re borrowing. Repayment of federal student loans is not optional. Although you have many repayment options, there is no option to repay. Students will pay voluntarily or involuntarily through default, leading to wage garnishment, tax offset, and more. So again, borrow responsibly!
Loans accrue interest. If possible, avoid capitalizing interest by making interest payments after your loans are disbursed. That payment will be made to your federal loan servicer, not your school. Don’t forget the moratorium on student loans, which has suspended interest and payments on all federal student loans until August 31, 2022.
Become familiar with studentaid.gov/. If you decide to borrow federal student loans, this website is your new best friend. It keeps detailed records of loans borrowed, loan types, balance (both original and current), interest rates, and most importantly, the servicer assigned to manage your loans. Just keep in mind the information it shows is based on the last time an update was reported. Therefore, it may not show the most recent data when viewing it. Contact your loan servicer for the most updated information regarding your student loan indebtedness.
Finally, understand you have the right to accept or decline any or all of the financial aid you are being offered. You do not have to accept your student loans. However, if you do, please remember to borrow responsibly!