Student Loans

Student Loans & Alternative Solutions (United States)

Street Smarts

As a former college student myself, I’ll try to offer the best advice that I have learned during my undergraduate career, and it definitely doesn’t include getting student loans since being in debt is not the best choice to receive funding for your education. However, in certain cases, it is necessary to apply for a student loan since you might not have any other options left. If that is your case, I want to propose to you alternative solutions that might positively impact your life down the road. Instead of beginning with the information for student loans, alternative solutions will be posted first since you might be given a second chance to redeem yourself from a life of debt.

Alternative Solution to Student Loans

I’m assuming that you have tried other financial aid options for the college that you are attending or going to attend such as applying for scholarships, grants, and financial aid. If you already did those processes but came up short, did you try researching trade schools? Even though most parents want you to attend a 4-year liberal arts school, you might not be able to find a job after your college education to pay off your debt. If that is your case, then it might not be a bad idea to look for trade schools since the economy nowadays needs hard-working people in fixing plumbing, constructing air ducts, and building houses. Since many people want to go for comfort and luxury in an air-conditioned building, they fail to realize that even a job like fixing air conditioners and building air ducts can earn a huge income.

Before I lose your interest, trade schools offer a variety of career options that you can choose from, and for most jobs, you just need to work experience in order to gain expertise and knowledge. For example, if you want to fix air conditions, you can apply to work for free in a company that fixes air conditioners, and in turn, you gain the needed knowledge and skills to fix air conditioners in the future. Then, you can begin to get your paycheck by doing your workload and advance through the ranks. In short, you don’t really have to attend college to get a job; however, one of the surest ways to qualify for a job is to attend trade schools (even this option is not always necessary).

Attending Trade School or Not?

I am not saying that attending a four-year institution is a bad thing, but attending an institution while gaining a huge amount of debt is a bad thing. If you can avoid it, please avoid it at all costs. If you really want to get an education but want to plan your way of getting out of debt, the best option for you is to apply for trade schools. People with undergraduate degrees (graduated from a four-year institution) can get a job, but the competition got fiercer since there are millions of college students who graduate from a four-year institution. Also, most high-paying jobs require a degree higher than a bachelor’s degree (master’s or Ph.D.) due to a large pool of applicants. However, there is no shortage of people in the hard-working areas such a fixing a broken appliance or doing maintenance on a car since the need in such areas increases day by day.

As people retire from hard-working jobs, there are fewer people joining the workforce since most people don’t like hard, physically-laboring work that makes them sweat and tired. If you want to avoid getting into huge debt in college and even a bigger one getting a graduate degree, I want to recommend you to try to know more about trade schools. Even though the cost of trade schools might not be cheap, you have a sure way to get out of your debt since you are preparing yourself to go straight into the workforce right after your college graduation. If you want to go into trade schools, there is a full-ride scholarship called Mike Rowe Scholarship that is offered exclusively to prospective students who are applying for trade schools.

Federal Student Loans

Even though you checked the alternative solution, you might be still undeterred from your path, so here it is. Student loans can be categorized into private and federal student loans, and most people choose federal student loans because it is offered by the government (so obviously, it is more reliable). I’m not going to cover the student loans covered by private companies since it varies from company to company, and also private student loan charges a higher rate of interest than federal student loan so I personally think federal student loans are better. Now, this is where it gets interesting since federal student loans split further into direct subsidized loans, direct unsubsidized loans, and direct PLUS loans, which I will explain the key aspects of each category.

A. Direct Subsidized Loans

This option is only available to the student himself, and your parents cannot use this option to get a loan. The first term Direct is pretty obvious since the loaned money will be funded directly into your school’s account, and the second term Subsidized means that this loan was based on financial need. If you are from a financially poor background and you need this money, then you will receive a subsidized loan. There are additional benefits to it since interest to your loan money will be paid by the federal government during your stay in college. The interest will accrue only after your college graduation since you can start paying back your debts after you have finished your undergraduate career.

B. Direct Unsubsidized Loans

The only term that you might not know is the term Unsubsidized. It means that this loan is not based on financial need, and it is available to undergraduate students, graduates, and professional students. There is one drawback to this student loan option since the interest starts accruing during your study period. The moment that you start using the unsubsidized loans, the interest rate will apply to your debt and will start to increase month by month. To be honest, direct subsidized loans sounded a lot better to me, so if you don’t get the subsidized loans, I don’t really recommend getting this loan to start off your college career.

C. Direct PLUS Loans

Last but not least, PLUS loans are available to graduates, professionals, and even parents of a dependent student, and that dependent student should have graduated from high school and currently on his way to get his undergraduate degree. Also, the people who are applying for Direct PLUS Loans should not have a bad credit history, and I strongly think that this type of loan is unsubsidized since it is not really based on financial need. I don’t really recommend this option either since your parents will have to pay off your loan no matter what and the interest rates continue to apply for the duration of your college career.

Application Procedure for Federal Student Loans

Similar to most applications for federal aid, you just have to file a form called FAFSA (Free Application for Federal Student Aid), and you will be awarded from your school based on your financial need. In addition, the loan options will all be included in your application so be sure to maximize your financial award by choosing the right options. You can apply through this link, but please, don’t apply for a loan if you don’t have to! Try to aim for a scholarship or a grant since you don’t have to pay back those financial awards. Also, don’t forget to visit our website for daily updates.