Reader Question: Are there Alternatives to Student Loans?

Posted by MoneyThinker in featured, loans | 0 comments

I was away last week, but I received a question from a reader, backtobooks, asking an important question that may have crossed all of our minds if we were considering higher education at some point. Here it is, if you didn’t catch it:

“I went to school 10 years ago and now I’m back with a 4.0. I want to go to nursing school, but because of my first failed attempt at college, I have loans, totaling $36K, and the limit is $57K. I have another year of prerequisites before 2 years of nursing school. I have extreme need, are there any alternatives for me to get more money? Scholarships are not an option yet because I’ve only been part time, next semester I will be full-time.”

$57,500 is the current limit for Federal Stafford Loans, both subsidized and unsubsidized. The good thing is, there are a few options for you other than these loans.

1. Perkins Loans. These are not included in the limit of your Stafford Loans. Usually offered through your school (they’re the lender instead of the Federal Government), they have a lifetime limit of $60,000. They are offered to people with “exceptional financial need.” Your eligibility for these loans and how much you’d receive from them will be outlined on your Free Application for Federal Student Aid (FAFSA) results.
2. Grants. Many states and colleges offer grants for people in need. Many will be listed with your FAFSA, but contact your school’s financial aid office just in case there may be one or two that have a separate application.
3. Scholarships. Do some research online; there are scholarships available for people who are part-time. Many websites, like fastweb.com, have hundreds of scholarships that you can apply for, and the reasons for applying run the gamut. Also, see if your school has any scholarships for part-timers or just for attending the school at all.
4. Alternative or Private Loans. I’m not a huge advocate for these, because their interest rates are usually much higher than Stafford and Perkins Loans and, unlike subsidized Stafford Loans and all Perkins Loans, the interest starts accruing from the time you borrow the money. If you don’t have any other alternatives, banks and other private lenders offer loans without the same limits that Stafford and Perkins loans have.
5. Work Study. Since the economy is struggling, these have become less common, but work-study programs offer on-campus jobs that can help you to get a little cash to put toward your education. At the graduate level, there are assistantships and fellowships that you can get to help waiver some of your costs as well.
6. Payment plans. Colleges and universities want to give you access to education; many of them can and will work out payment plans with you if nothing else. Contact your school’s financial aid office for more information.

I hope that helped you, backtobooks, and anyone else who may be wondering the same thing that you are. Also, dear readers, if you have any financial questions, I’d be glad to answer them in an article!