The MI Student Aid Team offers seven tips for financial aid best practices

LANSING, Michigan – As Michiganders prepare for the upcoming fall semester and begin paying for college, the Michigan Department of Finance’s student assistance team is asking students and their families to be careful and informed when considering student loans.

“Michigan students and their families shoulder a significant amount of the cost of higher education,” said State Treasurer Rachel Eubanks. “When student borrowers become their own financial advocate, they can better understand how to manage and use the financial aid they receive. Please think carefully about accepting only those loans that are necessary. The choices students make today will have consequences later in life.”

To help you make the best decision about your student loans, the MI Student Aid team recommends seven best practices when considering student loans:

  1. Fill out the Free Application for Federal Student Aid (FAFSA). Colleges use information from the FAFSA to determine their financial aid. By completing and submitting the FAFSA, students maximize all financial aid options.
  2. Understand that loans must be repaid. Not all financial aid included in a financial aid award letter is free money. Many financial aid awards will include federal student loans. Unlike grants and scholarships, loans must be repaid with interest.
  3. Check the amount of interest offered on the loan before accepting it. Federal student loans, parent loans for undergraduate students (PLUS), and private loans have different interest rates and repayment terms. Before taking out a loan, students should determine and compare the interest rate of each loan and then accept the loan with the best interest rates and repayment terms.
  4. Take only the amount you need. Students can either waive the loan or request a lower loan amount, and the financial award letter must include instructions on how to do this.
  5. Be aware of loan fraud. In a typical student loan scam, the scammer requests banking information from the student seeking the loan. Scammers typically claim they will use the information to make a direct deposit to a student’s account in exchange for upfront fees paid through gift cards. Instead, the fraudster accesses the student’s bank account and withdraws the funds.
  6. Visit your school’s financial aid office once a semester. While students may not have to start repaying their loans while they are in school, students should not wait to figure out their obligations. Students should know the status of their college or university’s student account and keep track of the types of aid they are receiving. By making this a habit, students can avoid over-borrowing and stay within their budget.
  7. Create a studentaid.gov account. The studentaid.gov The website, operated by the US Department of Education, is a one-stop shop for managing federal student aid. With a studentaid.gov account, students can track their federal student loans, check the interest rate on each loan and the total interest accrued to date. Students can also explore different repayment options, estimate monthly payments and find out who will service their loan when repayment begins.

Individuals nationwide have nearly $1.6 trillion in outstanding student loan debt, according to Federal Reserve Bank of New York.

For more information, go to https://www.michigan.gov/mistudentaid or contact the MI Student Help Desk mistudentaid@michigan.gov1-888-447-2687 or further facebook, Twitter, and Instagram.

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