• Avoid 5 Common Mistakes and Pay for College in 2020

    If you are the parent of a student starting their Senior year of high school in Chicago, you may be panicking about how to pay for college in 2020. One of the questions parents ask more often now than in the past is, “Will my personal student debt affect my child’s ability to get student loans?” On the upside, the short answer is typically “No.”

    On the downside, if you are struggling with loan payments while still making ends meet, you may need some help of your own. Contact the team at Benjamin Brand, LLP Attorneys at Law to learn more about how we can provide options that make dealing with your federal student loan debt in Chicago easier.

    While the status of your student loans does not affect your child’s eligibility for student financial aid, other issues affect your ability to pay for his or her college tuition. Here are five tips to help you avoid some of the most common mistakes parents make when helping their students plan for college.

    Mistake 1: Savings account for college in the student’s name instead of yours

    If the account is in your child’s name, it will be reported as a student asset on the FAFSA. This reduces eligibility for need-based aid by 20% of the account’s net worth. Depending on the type of account, you may be sheltered by the financial aid formula which can help you pay for college in 2020

    Mistake 2: Failing to file the Free Application for Federal Student Aid

    You may assume that your student will not qualify for need-based aid. That is not necessarily true. The financial aid formulas are complex and virtually impossible to predict. They take into consideration numerous factors, including whether you have another child in college. Retirement plans and net home equity are omitted from the process.

    Mistake 3: Waiting to file the FAFSA

    Students who submit their applications in January, February and March often receive considerably more aid than those who file later in the year. As much as double the amount. Some schools and states have very early deadlines and award grants on a first-come, first-served basis until they are out of money. Don’t wait to file tax returns or the admission letter. Apply as soon as possible. You can update all other information later.

    Mistake 4: Disregarding scholarships

    Most families wait until the last half of the student’s senior year to start the hunt for scholarship funds. By then, many of the application deadlines have passed. There are also scholarships awarded when students are in lower grades. The sooner you start searching for money to pay for school, the more likely you are to make it an integral part to help pay for college in 2020 and keep federal student loan debt to a minimum.

    Mistake 5: Choosing a school based on the aid amount vs. net price

    To get the net price of college, subtract the total of all gift aid (i.e., grants, tuition waivers, scholarships and other aid that does not need to be repaid) from the total college costs. This is the amount that the family will have to contribute to cover college costs. For example, your student is looking out of state, and the school costs $50,000 per year. They offer a merit-based scholarship for $5,000. The net price is $45,000. There are many Chicago schools that may offer equivalent scholarships, and you would be able to take advantage of in-state tuition. This could bring the net price down significantly.

    The general rule of thumb is that the student loan amount shouldn’t be more than a single year’s salary. Although that may not be practical in your situation, it is a place to start planning. When looking at schools, don’t completely disregard the costs because your student has his or her heart set on going there. If it drains all the family’s resources, or they drop out of school because they can’t come up with enough money, they will carry the debt for years, possibly decades.

    Contact Us Today

    Is your federal student loan debt in Chicago making it difficult to buy a home, go on vacation or finance a new car? Contact us today or call 312-853-3100. Located in the West Loop, we are easily accessed from I-90/I-290. The Benjamin Brand, LLP office is close to the University of Illinois at Chicago as well as the UIC-Halstead and Racine Metro stations. If you live or work in Little Italy, Greektown or the Near West Side, our office is nearby.

  • Tips to Take Control of Your Student Loan Debt

    When you decided to go back to college or start your degree in the Chicago area, chances are you took out student loans. If you are like millions of Americans, you have finished school, but are saddled with overwhelming student loan debt.  Not only have your financial conditions not improved, but you are stressed about the way the debt affects other aspects of your life from buying a car to qualifying for a mortgage. At Benjamin Brand, LLP, we often help clients in the West Loop address financial issues, from bankruptcy and student loan debt to mortgage restructuring and foreclosure.

    Take Back Financial Control

    If your life is full, juggling family, work and friends, it’s tempting to avoid dealing with student loans and other financial issues. Take the first step toward escaping student loan debt by analyzing the information in the emails or envelopes delivered by USPS from your student loan servicers. Here are some tips to reclaim control of your school debt by getting to know it a bit better.

    Start by writing everything down or entering it into a spreadsheet. Sometimes it helps to be able to see everything laid out.

    • How many student loans do you have? Are they public or private? The federal government backs public loans, but each type has different borrower protections. Take some time to read the fine print and understand what they are.
    • What are due dates and minimum payments for each?  This can help you build a realistic monthly budget that incorporates the amounts.
    • What is the repayment timeline for each loan? Most default to a 10-year plan, but if you can pay them off sooner, you’ll pay less in interest over the loan’s term. Make sure there are no prepayment penalties.
    • What is the balance and interest rate for each? This will tell you how much you are estimated to pay over the life of the loan. It can also help you decide if refinancing the loan is a viable option.

    Because student loans are installment loans instead of revolving debt, like credit cards, credit scoring models are generally more forgiving. Make on-time minimum payments to give your credit score a boost and limit credit card use. Maxing them out hurts your score.

    Consult with a Chicago Attorney Near Me

    Our team can help you make sense of your student loan paperwork and work with you to develop a plan to get your financial life back on track. Are the default minimum requirements out of the question?  We will discuss which repayment plans work best for your budget and current situation. Deferment may sound good, but the downside is an inflated balance due to interest fees. Contact us today to schedule an appointment and learn more about how we can help you take back control of your student loans and move on with your life.

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