Student Loan Guide for Aspiring Engineers
Managed correctly, student loans are a solid financial tool for aspiring engineers. With a variety of government and private grants and loans available, you can have enough money for college and defer repayment until you find work. Keep in mind, that excessive borrowing can lead to financial difficulty, and you can often reduce your debt load while gaining experience by working in your chosen field while you are a student.
The FAFSA process
The first step in obtaining financial aid is to fill out the federal Application for Student Aid (FAFSA) to see if you qualify for federal funding. You can complete your FAFSA online at www.fafsa.ed.gov or turn it in to your school’s financial aid office. Visit the site to learn more about federal loan requirements and benefits.
Government loans for engineering programs
After filling out your FAFSA, you should see what government loans are available to you as an aspiring engineer. The four types of federal students loans are Stafford loans, Perkins loans, PLUS loans, and consolidation loans. Stafford and PLUS loans are the most common types of student financial aid, while Students with the greatest financial need can apply for Perkins loans. You may want to consider a consolidation loan when you graduate to lump all of your loans into a single interest rate and payment. Government loans are often easier to obtain than private loans, have lower interest rates, more repayment options, and better forgiveness programs. Try to get as much of your financial aid through government loans as you can.
Discounted Stafford loans
The private institutions that fund government subsidized Stafford loans sometimes offer discounts for prompt payment, direct deposit, and academic performance. These discounts can add up to thousands of dollars in savings over the life of your loan.
Private loans for engineering programs
If your savings and federal loans are not enough to cover your tuition and living expenses while in school, you may want to consider a private student loan to make up the difference. Banks and other lending institutions provide private loans to engineering students and may have different requirements than federal loans. Unlike need based federal programs, private loans are based on your credit history. Interest rates are variable, and depending on your credit score, you may need a cosigner.
Loan forgiveness programs
The government forgives federal student loans for various reasons. People who teach in certain low-income schools for at least five years can have a portion of their loans forgiven. Loans can also be cancelled for people who have made at least 120 monthly payments and work in a public service job. Perkins loan holders can have some or all of their debt repaid through service in the peace corps or ACTION program, through work in the armed forces, or employment in fields such as teaching, law enforcement, child and family services, and early intervention programs. Student loans are almost never discharged during bankruptcy; however, federal loans do have forbearance and deferment options to help people in financial difficulty.
Local loan forgiveness and cancellation programs
Private loan forgiveness is rare, but there are options for debt forgiveness. One of the most common debt elimination solutions is through an employer. Many larger companies offer student loan repayment as a benefit to their employees after a certain number of years of service. Options range from partial payments for studies in any area to complete loan repayment for studies directly related to the employee’s line of work.
Student loans provide opportunities for students pursuing an education in an engineering program. It is best to use government loans for the majority of your expenses and private funding to fill in any shortfall. Always remember that while deferment options exist for some loans, eventually you have to replay what you borrow. Enjoy your college experience, but learn to be frugal so that you will still have financial freedom when you graduate.