North Carolina Student Loans

North Carolina studentWith 21,945,597 hopeful students applying for financial aid across the nation during the 2011-2012 academic year, per Forbes Magazine, it stands to reason that student loans will continue to be a major player in the game of college education. According to the Project on Student Debt, approximately 69 percent of public and nonprofit school graduates in 2013 had used a student loan to fund all or part of their college expenses.Financial aid for North Carolina students includes a myriad of scholarships, grants including the Federal Pell Grant, work-study programs, and more. Some students who are in-state residents are eligible for subsidies, provided they can prove their residency. Others may benefit from the state’s Education Lottery Scholarship, which provides $100 to $3,400 annually to needy students.

North Carolina Notables

The Tar Heel state is pretty accomplished when it comes to colleges and universities. Boasting the number 8 school in the nation per U.S. News­­ — Duke University — the state carries some clout when it comes to college graduates, but that doesn’t necessarily mean their student loan options are any superior to other states.

Duke University is a name known around the globe and most widely recognized for its prized research department. According to the North Carolina College Finder, tuition at Duke is upwards of $45,376 per year, and around 94 percent of all students in attendance end up graduating. The University of North Carolina at Chapel Hill is a public Ivy League school and also well known for research. The school costs far less than private schools like Duke at only $11,092 yearly, per College Stats.

Wake Forest is yet another popular private university from the state of North Carolina. NC College Finder reports a degree from Wake Forest costs about $44,928 a year. They are also primarily focused on research. All three of these schools boast popular college sports teams as well.

Federal Perkins Loan

The Federal Perkins Loan is produced via federal funding to individual colleges and universities, and it is likely one of the lesser popular options when it comes to federal loans. Note that not all schools accept these funds, so prior to setting your sights on it, verify that your institution of choice does. During the 2011-2012 school year, private nonprofit institutions received 52 percent of all Perkins Loans distributed that year, while 45 percent went to public four-year schools, 2 percent to for-profit colleges and 1 percent to public two-year institutions, College Board reports.

This loan comes with a 5 percent interest rate, much lower than other loans, but with need-based strings attached. The maximum amount an undergraduate can borrow is $5,500, whereas grad students can borrow up to $8,000. That being said, how much a student receives is based strictly on their financial need and how much funding is available — somewhat different from the way other federal loans work. One of the biggest perks of this loan is that the interest rate never wavers during the entire decade-long repayment period, which doesn’t begin until nine months post-graduation.

Federal Direct Stafford Loans

These loans come in both subsidized and unsubsidized forms. The subsidized version simply means that the government will pay the interest on your loans while you’re attending college, whereas the unsubsidized version does not carry this perk. You must be enrolled at least half-time in a degree- or certificate-granting program, be a citizen of the United States, and have applied for and received a response for the Federal Pell Grant in order to qualify for either of these loans. Both loans boast a 4.66 percent interest rate. Unsubsidized loans for graduate students have a higher rate of 6.21 percent, the Student Financial Aid for North Carolinians reports.

How much you can borrow under either of these loans depends on what year you are in your college attendance and whether you are considered a dependent or independent. Grace periods for these loans last for six months following graduation or the point at which a student drops beneath half-time status.

Federal Direct PLUS Loans

Graduates and professional students can borrow these loans at a maximum of whatever their remaining college costs are after all other financial aid has been applied. To be granted one of these loans, however, you must apply for annual loan maximum eligibility and you cannot have bad credit. In addition, interest is higher on these loans at 7.21 percent, and repayment starts while you’re still in school, making it somewhat unfavorable to some applicants. As soon as the final disbursement goes out, your repayment period begins. Deferments are possible for those who are attending school at least half-time, but repayment is necessary as soon as they aren’t. In other words, you won’t get any sort of grace period with this one.

The Federal Direct PLUS Loan for Parents is another variation of this loan that parents can apply for to pay for their child’s education costs. The same interest rates and credit requirements apply to parents as to students, but parents get the added benefit of a six-month grace period. However, interest must be capitalized or paid on quarterly.

Private Loans

Private loans are rendered by individual lenders, from banks and credit unions to freestanding third-party institutions. The Institute for College Access & Success notes that 2,901,000 college students borrowed private funds for college during the 2007-2008 academic year, whereas on 1,373,000 did during the 2011-2012 year.

Paying It Back

Student studying

Repaying your student loan debt after graduating from a prestigious North Carolina school is often the last thing on some students’ minds, but it should be a priority. Not being able to make payments is a serious problem for many, and it could impact your credit severely. The average cost of a college degree is $22,826 for in-state enrollment at a four-year public institution, where it reaches $44,750 at a private school, per College Data. For those borrowing the amount in whole via student loans, the total amount will be compounded with interest. Most loans offer a six-month grace period, with the Perkins Loan being the exception at nine months.

Those who can’t afford to pay any or all of their monthly payments do have options, but they require forethought and planning, so don’t wait until the last minute to seek assistance. Some of the primary choices among new grads are income-based repayment plans These plans structure your payment amount each month around how much you’re making at work. Those who are unemployed or underemployed may make little enough that they qualify for a deferment or forbearance. Neither are long-term fixes, and you will have to pay eventually. Plus, any time spent delaying such is time spent accruing interest.

Other plans include the Pay-as-You-Earn option, which increases as your income does. The graduated and extended repayment plans are not as popular, but they are the best option for certain students. Loan repayment options also exist apart from regular federal loans for service members in the Army Reserves or National Guard. These programs enable graduates to trade part of their time in service for 15 percent or $500 — whichever is larger — toward an existing federal loan balance. Overall, going into default — something The New York Times  reports 13.7 percent of people in their third year of repayment as of late 2014 were in — isn’t necessary.

Forgiveness

Loan forgiveness and cancellation plans apply to certain loan beneficiaries who meet qualifying criteria. Those who work as teachers in low-income districts or teach certain subjects may qualify for partial or total loan cancellation, as do some nurses, firefighters, and Peace Corps volunteers.

Ready to Apply?

The application process is pretty simple, and it starts with completing and submitting the Free Application for Federal Student Aid. You can find this online or through your school’s admissions office. Over 98 percent of all students who complete FAFSAs do so online, per U.S. News. You’ll have to include specific information on your FAFSA, such as your income, or your parents’ income if you’re considered a dependent.  Those in need of assistance completing their application can receive it via the College Foundation of North Carolina’s annual FAFSA Day, held every February.

Whether you’re aspiring for a future as a freshman attending North Carolina State University, or you’re settled as a senior attending Appalachian State University in the woods of Boone, North Carolina’s higher-learning facilities have a lot to offer.

 
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