Indiana Student Loans
If you’re considering applying to or enrolling at a college or university in Indiana, you’re likely interested in learning more about the overall cost involved. While it’s ideal for every college student to picture their dream school, apply, be accepted, and move forward with enrollment, it’s not always a reality. A college education costs a hefty amount in this day and age, and the price tag seems to go up every year. Since 1978, college tuition prices have increased by 1,225 percent, Bloomberg reports.
Indiana is home to the University of Notre Dame, ranked 16th in the nation, per U.S. News, and recipient to numerous accolades and worldwide recognition for their school of architecture. To attend the university on an in-state basis, you’ll pay around $26,194 every year regardless of residency, making Notre Dame favorable to out-of-state students but still far more costly than in-state tuition at competing schools. The state also houses Purdue University, known for producing 22 alumni who later went on to travel to space. In-state tuition starts at just over $10,000 and expands to a base of $28,804 for out-of-state students.
Across the state of Indiana as a whole, average tuition rates among four-year public schools are now at $9,023 per year and $30,044 for private institutions, College Board reports. So what do students in the Hoosier state do to pay upwards of $10,000 a year for a college education? The answer is apply for financial aid. It comes in many forms, including:
- Work-study programs
- Student loans
Many student loans place maximum borrowing limits on loans that are aligned with your tuition balance after you’ve exhausted all other aid options. For example, if your tuition for the year is $10,000, and you’ve been granted a $5,815 Pell Grant and a $2,000 scholarship, your balance is $2,225 and you wouldn’t be allowed to borrow more than that when using certain loans. This applies more so to federal loans than private ones.
With private loans, you can borrow as much as you need to in order to cover all college tuition and fees, in addition to living expenses and more. Among students who graduated in 2012, 20 percent of all their debt came from private student loans, the Project on Student Debt reports. Private loans generally have higher interest rates than federal loans — the price you pay for unlimited borrowing potential. Indiana students can find themselves in dangerous territory trying to repay these debts when they’ve over-borrowed, something many credit unions will actually encourage you to do. Before entertaining the idea of a private loan, you should exhaust every other financial aid and loan option available to you.
The State Student Assistance Commission of Indiana offers help to students in securing financial aid and loan funds, but there are no state-funded loans available to Indiana students or residents. Instead, students are encouraged to seek private loans through local banks and credit unions. Again, it’s recommended that you first apply for federal loans and use any and all funding you can attain from those resources first.
Federal Perkins Loans
According to College Board, 52 percent of Perkins Loans rendered during the 2011-2012 school year were to private non-profit institutions, 45 percent to public four-year schools, 2 percent to for-profit institutions, and 1 percent to public two-year schools. The low 5 percent interest rate is enough to intrigue most students, and the rate never changes from the initiation of the loan throughout the entire repayment period. That being said, there are limits to how much you can borrow. Undergraduates can borrow no more than $5,500 and graduate students no more than $8,000.
The subsidized version of the federal Direct loan is likely the most widely recognized and desired. These loans boast a low interest rate for loans distributed on or after July 1, 2016 at 3.76 percent, and the government pays for the interest that accrues while you’re enrolled in school. The unsubsidized version comes with the same interest rate, but you’re liable for making your own interest payments. Graduates have a higher interest rate of 5.31 percent.
Direct loans carry the highest borrowing limits, which start at a mere $5,500 for dependent freshmen and escalate to $12,500 for independent juniors and beyond for the 2016-2017 school year. Both come with six-month grace periods before you’re required to start paying the money back.
Ridding Yourself of Loan Debt
Repayment plans are a necessary component to student loans, as 18 percent of individuals liable for making payments as of June 2014 were in default on their loans, per the Huffington Post. Indiana students who find themselves struggling to cover the monthly amount of their bill — or pay any of it at all — should not ignore their responsibility. Those who qualify for a deferment can get an extension on their plan for several years if need be. During this time, they won’t be liable for making payments on the balance or any interest.
Forbearance is another option for students who don’t make the cut for deferment but still can’t afford to pay their student loan bills. Interest payments are still required, but the principal balance may be postponed for up to 12 months. Others may be able to make payments but just not the amount of the standard payment plan. The extended plan allows Indiana students to stretch their payments out over a longer period of time so they can virtually cut their monthly payment amounts in half.
The graduated payment plan allows borrowers to start out paying a lesser amount each month and slowly increase payment amounts over a longer period of time. Learnvest states a reported 1.2 million borrowers were currently enrolled in the graduated plan as of November 2013. This option works well for those just starting out in their career who expect to make more income in the future. Another choice for said persons is the Pay-as-You-Earn plan, which bases monthly payments off your current income. Other plans centered on income include the Income-Based Plan, the Income-Contingent Plan, and the Income-Sensitive Plan — each with their own stipulations.
Another option for getting rid of your loan debt is a cancellation plan. Cancellation plans are much harder to come by and not applicable to everyone. First and foremost, you must be in a qualifying career field. The Huffington Post states that over 33 million student loan borrowers are eligible for forgiveness due to their commitment to working in certain sectors, such as teaching, nursing, the judicial system, and more.
Take the First Step
All you have to do to start on the path to obtaining student loan funds is apply. This starts by filling out the FAFSA — something 21,945,597 other people did in the 2011-2012 school year, per FinAid. Prior to applying, make sure you have all income information nearby as well as identifying information and tax data for your household.