Federal student loans offer complimentary funds to cater for college fees and expenses, but they don’t cater for every expense. Unfortunately, the Education Department has a limit that you can borrow during an academic year or throughout your college life. Suppose you hit your student loans limit; you may be required to explore other options. Here is what to do when you hit your federal student loans Limit.
Opt for PLUS Loans
Suppose your attendance cost is more than the direct subsidized loan or direct unsubsidized student loan; you can opt for parent PLUS and grad PLUS to raise more money for college. However, be careful with their terms and conditions since there are some disadvantages with the PLUS student loans, such as;
- High interest rates – for instance, loans disbursed after 1st July 2020 will attract an interest rate of 5.3%, while direct graduate student loans have a 4.3% interest. Undergraduate loans attract a 2.75% interest.
- Positive credit history is mandatory- Students with adverse credit history cannot qualify for PLUS student loans.
Furthermore, PLUS loans are only for parents and graduate students. For undergraduates, you may require a part-time job to finance your studies.
Borrow from Private Student Loans Providers
Private student loans are not subject to federal student loan limits, but each private lender has its limit. For instance, Common bond has a lifetime limit of $500,000 while Citizens Bank limits $150,000 for undergraduates. Like PLUS loans, borrowers from private lenders require a good credit history to qualify for private student loans.
Although private loans are available at competitive rates, borrowers are not guaranteed all the federal student loans’ borrower protections. Private loans have more risks since they don’t have all forbearance, deferment, and repayment options like federal loans.
Private loans may lack favorable individualized payment plans like income-based repayment. Apart from a good income and debt-to-income ratio, you need a co-signer to qualify. Suppose you decide to borrow student loans from private lenders, send your application online after filling in your details. Your lender will then contact your institution to certify your details.
Before you apply, research extensively for a lender with the lowest rates and a reasonable repayment plan.
Seek Merit-Based Institutional Aid
For students and parents nearing educational limits or whose student loans cannot cater for University costs, there may be help at the institutional financial aid offices. Whenever loans are inadequate for a needy learner, universities can offer merit-based aid. If you are lucky, you can get a favorable plan and avoid a loan.
If you feel you qualify for merit-based aid, make an effort to visit your institutions’ financial aid office. It is prudent to make an appointment and meet the responsible officer in person. Explain why you need more financial.
Apart from institutions, you may also seek financial aid from your state.
Look for Scholarships and Grants
Before you take student loans for college expenses, explore options like grants and scholarships that you don’t have to pay back. Check if you are eligible for TEACH (Teacher Assistance for College and Higher Education) grant. TEACH offers $4,000 annually to teaching courses, especially in special education, mathematics, science, and foreign language. Students enrolled in post-baccalaureate programs can access Pell Grant that is for undergraduates.
Scholarships can be given by professional organizations, religious groups, or any association related to your course of study. If you are stuck, you may consider loan forgiveness programs if you are in an eligible field.
Moreover, you can ask for financial assistance from your employer. If you are an undergraduate student with no job, you can consider looking for a part-time job or start a business.
Therefore, reaching a student loan limit isn’t the end of it all. You now have an idea of what to do when you hit your federal student loans limit. Don’t hesitate to do whatever can to achieve your dreams.