Student Loan Options Massachusetts

The first step toward applying for student loans is to fill out a financial aid application form called the Federal Application for Student Financial Aid. Once you have been accepted to a college or university, you will be sent a packet of financial aid information. You will be asked to provide your own and your parents financial information so the aid agency can assess your need and your ability to pay. There are many government based grants, like the Pell Grant, that give money to low-income students and their families with no obligation to ever pay it back. However, grants can only pay for so much, and you will most likely require student loans to finance the rest of your educational expenses.

If the free financial aid you qualify for is not enough to cover your expenses, student loans can help you make it through college to get the degree you need to be financially successful later in life. There are many different types of student loans available for both conventional and nontraditional students. Federal education loans like Perkins and Stafford Loans can be funded by either the school, your bank, or by the U.S. Department of Education. Private education loans are not sponsored by the government and draw funds from a variety of different sources. If you are still considered a dependent, either you or your parents can apply for student loans to finance your education.

Guaranteed Student Loans, or Stafford Loans, typically have lower interest rates than private loans. These loans are guaranteed by the federal government, and they can be subsidized or unsubsidized. If you have a subsidized loan, the government pays your interest while you are in school. With an unsubsidized loan, you begin accruing interest while you are in school, but you do not have to pay it back until you have graduated. You must show financial need to obtain a subsidized loan, whereas unsubsidized loans are available to anyone who applies.

Often times, Direct Student Loans are the loan of choice for many students. Direct loans are handled directly by the school you are attending. These types of loans typically have lower interest rates than most others. Your college or university may obtain the funds from a variety of sources, but all of the payments are generally made to the school itself. Once you are finished with school, you typically have anywhere from six to nine months to begin paying back your accrued debt.

If you finish school and cannot afford to pay back your student loans, they may be placed in default. This affects your credit rating and can keep you from getting other loans in the future. You can be granted a deferment on your loans if you decide to continue your schooling in graduate studies, or if you are unemployed. Deferment, however, does not last forever. If you have many different student loans, you can often consolidate them using a consolidation service, or, if you have direct loans, you can consolidate through your schools lender.

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The American Opportunity Credit is not available on the 2008 returns taxpayers are filing during 2009. The new credit modifies the existing Hope Credit for tax years 2009 and 2010, making the Hope Credit available to a broader range of taxpayers, including many with higher incomes and those who owe no tax. It also adds required course materials to the list of qualifying expenses and allows the credit to be claimed for four post-secondary education years instead of two. Many of those eligible will qualify for the maximum annual credit of $2,500 per student.

The full credit is available to individuals whose modified adjusted gross income is $80,000 or less, or $160,000 or less for married couples filing a joint return. The credit is phased out for taxpayers with incomes above these levels. These income limits are higher than under the existing Hope and Lifetime Learning Credits

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