Student loans give needed financial assistance to people who want to attend college but can't afford it. Many colleges and universities offer many student loan options. The information in this article will help people when making important decisions about where to go to school and how to pay for it.
Choose a College Carefully. There are three different types of colleges and universities to choose from:
- Public colleges and universities (eg. Cuyahoga Community College, Cleveland State University)
- Non-profit colleges and universities (eg. Baldwin Wallace University)
- For-profit or "proprietary" schools (eg. Lincoln College of Technology)
In general, Ohio's public universities have the cheapest tuition for Ohio residents. For example, one semester tuition at Tri-C in an associate degree program costs as little as $1,200,[1] and one semester tuition at Cleveland State University in a bachelor's degree program costs about $4,700.[2] In contrast, one semester tuition at Lincoln College of Technology in an associate degree program costs as much as $13,200.[3]
Choose a Loan Carefully: There are two basic types of student loans: federal and private. Federal loans are regulated by the U.S. Department of Education, which sets the terms and limits the interest rates. Private loans come from private lenders who set their own terms and interest rates. Before signing any loan contract, compare loan offers from different lenders because some loans are more expensive than others. Always ask lenders the following questions:
- How much money are you lending me?
- What is the interest rate?
- When will interest start to "accrue" (build up)?
- When do I have to start paying the loan back?
- How much will my monthly payments be?
- What kinds of repayment plans are available for this loan?
One advantage of federal student loans is the option for an income-based repayment (IBR) plan for borrowers who have a financial hardship. Under IBR plans, monthly payments are limited based on the borrower's income.
Remember, student loans must be repaid, even if the student does not graduate, cannot find a job, or was unhappy with the school. Student loans are not automatically discharged in bankruptcy.
For more information on student loans, visit the U.S. Department of Education website, www.ed.gov. Another helpful website is www.studentloanborrowerassistance.org, which comes from the National Consumer Law Center.
If you have problems with federal student loans, contact the Federal Student Aid Ombudsman Group at www.ombudsman.ed.gov. If you have problems with private student loans, contact the Consumer Financial Protection Bureau's Private Student Loan Ombudsman at www.consumerfinance.gov/complaint (click on "Student Loan").
IMPORTANT: Avoid Scholarship Scams! Many colleges and universities have limited scholarships, or money that does not need to be paid back. Find out how to apply for scholarships on a school's website or by contacting the financial aid office.
Beware! Some companies claim to offer "scholarships," but they are actually trying to steal your cash, credit card number, or bank account number. Ways to protect yourself are:
- Never give your credit card or bank account number to "hold" a scholarship "” this is a scam! Real scholarships do not ask for credit card or bank account numbers.
- Real scholarships are free. If you have to pay money to apply, the scholarship is a scam.
- If someone calls and says you were "selected" for a scholarship, but you never applied for any scholarship, this is a scam! Hang up the phone and do not provide any personal financial information.
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[1] Cuyahoga Community College, Tuition & Payment Schedule for 2013-2014 Academic Year, available at http://www.tri-c.edu/payingforcollege/Pages/TuitionPaymentSchedule.aspx. The cost is about $1,200 for Cuyahoga County residents and about $1,500 for other Ohio residents.
[2] Cleveland State University, Tuition and Fees 2013-2014, available at http://www.csuohio.edu/treasury-services/tuition-and-fees.
[3] Lincoln College of Technology, Net Price Calculator, available at http://www.lincolnedu.com/net-price-calculator.
This article was written by Legal Aid Managing Attorney Julie Robie and appeared in The Alert: Volume 29, Issue 3. Click here to read the full issue.