Financial Aid

HELPFUL HINTS:

Apply for financial aid on time, for consideration for all types of aid.  The deadline in the State of Michigan is March 1st.

Utilize government loans first.  Government loans are easier to get, have better borrower benefits than private loans, and generally have lower interest rates.

Borrow as conservatively as possible.   30% of employers today look at prospective employees’ credit reports prior to offering a job.  They equate good credit with good character.

Learn about the total cost of the loan – in the long run.  Inform yourself of how much it will be upon repayment and the TOTAL amount you will pay overall. 

The 8% Rule:  Experts recommend that student loan payments should not be more than 8% of your annual income.  Otherwise, money available for everyday living expenses will be limited and you will have a more difficult time getting approved and paying for car loans, mortgages, etc.

Another Rule of Thumb:  Don’t borrow more over your college career (4-5 years), than what you will earn in income during your first year working.  Check out the Dept. of Labor’s web site at for “entry-level” starting salaries.

REMEMBER:  Deferring debt (not having to repay it until a later date), does not erase the debt.  It all has to be repaid eventually.

WANTS VS. NEEDS:  Learn to distinguish between a want and a need.  Needs are things you must have to survive.  Before  you buy something, determine how badly you want it, and if it is worth the cost.

USE a COSIGNER:  On private loans, use a cosigner.  It increases the likelihood that you will be approved AND usually results in a lower interest rate.

Avoid “Direct to Consumer” private loans.  These loans are provided by some commercial loan companies who will market them as educational loans that do not have to be approved by the college.  CAUTION – These loans often have hidden costs and interest rates that start out low and climb during the life of the loan.   Use loans that are certified through your school.  Simple tuition link

When applying for a private loan, lenders’ web sites often have tutorials and counseling links.  Take advantage of this opportunity to educate yourself!  Utilize these services. 

Alternative (private) loans have no bankruptcy protection.  If you experience financial difficulties severe enough to choose to declare bankruptcy, it will not erase or liquidate any of your alternative loan debt. 

Budgeting Tips:

• Learn the difference between a list of monthly expenses and a budget.  A budget includes a well thought-out plan of how to pay for all the expenses on the list.
• Carefully consider buying something if it is just a  “want”, rather than a “need”.
• Save your pocket change in a piggy bank or empty container on the dresser.
• Do not carry or spend any currency in your wallet under $5.00.  Save  your dollar bills.
• Skip lunch or dinner out one day a week.
• Rent a movie instead of going to the theater.
• Before you make a purchase, calculate its price in terms of hours you must work to pay for it.  If that makes you hesitate, don’t buy it at this time.

FICO Facts:

• FICO is a large part of your credit rating.  Lenders usually base their approvals and disapprovals on FICO.
• FICO ranges from 300-850.  A higher score is better and can result in a lower interest rate.
• The median FICO score in the U.S. is 723.
• FICO scores are calculated based on your rating in five categories:  payment history – 35%,  amounts owed – 30%, length of credit history – 15%, new credit  -- 10%, types of credit used – 10%.