Balancing Student Debt and College Costs

GOLDEN VALLEY, Minn.- Student debt is straining millions of students' and families' finances, and it is a hot-button topic on college campuses across the country. Financial Advisor Dan Ament visited KARE 11 Sunrise to discuss how to manage and repay student debt.

A Sallie Mae report found families spent an average of $21,178 on total college costs last year. Most families pay for nearly a third of college costs with "free money"—scholarships and grants—according to Sallie Mae. More than a quarter—27 percent—of the total college tab is covered by loans. Another 27 percent comes from parents' income and savings.

Choose career path-While difficult for a young adult to contemplate as they embark on their college education, consider what career track(s) fit your talents and interests and how that career fits the school and related debt you must repay to achieve your degree.

Federal loan forgiveness programs- In certain situations, you may be eligible to have your federal student loan forgiven or discharged. This includes those employed in certain public service jobs and requires criteria be met with regard to a minimum number of payments being made.

American Opportunity Tax Credit – Opportunity for eligible families to pursue tax credits.

Federal Stafford Loans vs. unsubsidized Federal Loans - You will repay a Federal Direct Stafford Loan to the U.S. Department of Education. Visit for more detailed information

Subsidized – A subsidized loan is awarded on the basis of financial need, as determined by the information you submit on the Free Application for Federal Student Aid (FAFSA). If you are eligible for a subsidized Stafford loan you will not be charged interest while you are in school on an at least half-time basis, during a grace period of up to six months after you are no longer enrolled on at least a "half-time" basis, or during certain defined deferment periods. The Federal government pays (subsidizes) the interest during these periods.

Unsubsidized - An unsubsidized loan is not awarded on the basis of need. But you still must apply using the FAFSA. For unsubsidized loans, you will be charged interest from the time the loan is disbursed until it is paid off in full. However, you can choose to defer payment of interest while you are in school and during any grace or deferment period. However, if you allow interest to accrue (accumulate) during these periods, it will be capitalized. This means that interest will be added to the principal amount of your loan, and additional interest will be based on that higher amount.

Source and excerpts from: – Is your child college bound? How do you pay for it? The other student debt crisis 10 Best cities for today's college graduates


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