Lesson 9: Taking Out a Student Loan to Pay for College As a Student with Vision Loss

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Key Considerations

After you submit a Free Application for Federal Student Aid (FAFSA), you will receive an award letter from the college or career school you will attend. The award letter will include a list of funds you are qualified to receive based on your financial need as a student with vision loss. The funds may be in the form of grants, work-study funds, and/or student loans. You should accept money you do not have to pay back first, such as a grant or work-study funds. If the amount of “free” money is not enough to cover your anticipated expenses, you may need to borrow some money in the form of a student loan.

Before you accept loan money or funds you will be required to pay back, it is important to understand the different types of loans as well as the terms and conditions associated with the loan. Beginning your professional life as an individual with vision loss in debt or at risk of not being able to pay back the loan upon graduation could put your future credit history at risk.

Federal student loans are loans you will have to repay with interest. There are two types of loans: subsidized and unsubsidized. The federal government will pay the interest that accrues on a subsidized loan while you are in school or in a grace or deferment status. Your loan will be in a grace period for a set amount of time after you graduate, leave school, or drop below part-time enrollment. The grace period for most loans is six months. You may qualify for a deferment on your loan, which allows you to temporarily postpone or reduce the amount of money you pay. For instance, if you enroll part-time in college or career school or you are unable to find full-time employment, you may apply for a deferment. After the deferment period, you will be expected to begin making monthly payments on your loan.

If you take out an unsubsidized loan, you will not need to demonstrate a financial need to borrow the money. However, interest begins accruing as soon as you take out the loan. You can choose to pay the interest while you are in school or defer the payments until you are out of school. The total amount of accrued interest will be added to your original loan amount.

In your FAFSA award letter, you may be offered more money than you need. You have the right to turn down a loan or request a lower loan amount. You may be asked to sign a promissory note which is a contract between you and the lender that specifies the terms and conditions of the loan. Be careful not to sign any documents you have not read. Typically, your grants or loans will cover your education-related expenses for a full year, and you will receive your money in two payments; one at the beginning of the academic year and the other in the middle. Your institution will apply your loan money towards your tuition, fees, and room and board. Any remaining money can be used for college expenses.

Assignment #1

Use the Office of the US Department of Education’s Federal Student Aid website to learn more about student loans.

1. How much money can you borrow?
   
2. When will you have to start paying back your loan?
   
3. What does it mean to consolidate a loan?
   
4. What types of loan payment plans are available?
   
5. Can loans be forgiven?
   
6. If you borrow $15,000 at an interest rate of 5 percent and it takes you 10 years to pay it off, you will pay $152 a month. You will pay a total amount of $3,240 in interest. If it takes you 20 years to pay it off, you will pay $212 a month, and the interest will be $10,440. How much more will you pay for a loan of $15,000 if you pay it off in 20 years with an interest rate of 5 percent?
   
7. If you borrow $30,000 at an interest rate of 5 percent, approximately how much will your beginning monthly loan balance be?
   

Assignment #2

Create a budget for your projected expenses for college. Make a list of potential sources of funding for college. Will you need to take out a student loan if you are not awarded aid? If so, how much will you need to borrow each semester? Estimate how much you will need to borrow and how much you will owe each month when you graduate.