Published in: Student Loans | Aug. 20, 2019

Federal Student Loans Not Enough? Here's What to Do Next

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Federal loans are the best way to borrow for college. But what happens when you need more money than they’ll give you?


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Many people have no choice but to take out student loans to pay for college, and if you're going to borrow money for your education, federal loans are generally your best bet. That's because federal loans come with reasonable, capped interest rates that make that debt more affordable to pay off. Federal loans also come with certain borrower protections so that if you do wind up struggling to repay your debt, you have options. 

The problem with federal loans, however, is that they only allow you to borrow a certain amount of money for college. Right now, the limit is $31,000 for undergraduate students who are also considered other people's dependents (except for students whose parents are unable to get PLUS Loans). And to be clear, that limit isn't an annual one; it's the most you can borrow from the U.S. Department of Education to fund an undergraduate degree. If that's not enough money for you, then you'll need to find ways to cover your remaining costs. Here are a few options to explore in that regard. 

1. Pursue scholarships

You can't just snap your fingers and demand a scholarship, and they're not always easy to come by. But if you have a particular talent, or have ties to an organization that gives out funding to students, then it pays to see what scholarships could be on the table. Keep in mind that you'll sometimes find scholarships where you least expect to, so if you're a cello star, or have mastered three foreign languages, an ongoing internet search could be your ticket to some extra money for college.

It also pays to see if your parents or other family members work for a company that offers college scholarships. You might still face stiff competition, but it's worth a shot.

2. Get a part-time job during your studies

If you can't borrow enough in federal loans to pay all of your college costs, working part time while you're in school could produce enough money to bridge that gap. If you have access to a vehicle or public transportation, you'll have the option to explore jobs both on campus and off. Additionally, you can plan on working in between semesters, such as during your winter and summer breaks. 

If you're going to get a job, however, make sure it's one that doesn't interfere with your studies. If you fall behind in your coursework to the point that you fail your classes and need to repeat them, you could wind up extending your stay as a full-time student, thereby adding to your total cost.

3. Take out private loans

Private student loans aren't always ideal. They typically charge more interest than federal loans, and those rates are often variable, which means they have the potential to climb over the life of your repayment period. Private loans also don’t offer the same borrower protections as federal loans. For example, if you take out federal loans and can’t keep up with your monthly payments after the fact, you might qualify for an income-driven repayment plan that recalculates those payments based on what you earn. Private loans don’t have such official programs in place. 

That said, if you have decent credit when you apply for private loans, or you have a parent or relative with great credit who’s willing to co-sign on those loans, then your interest rate might not be so brutal. And if you run into trouble making payments down the line, your lender might agree to lower them. Therefore, don’t write off the idea of private loans until you see what terms you actually qualify for. 

If you run out of federal loan dollars for college, don’t despair; there are other options you can pursue. Of course, there’s another solution at play, too, and it’s choosing a less expensive college. If you’ve been accepted to one you can pay for with federal loans only, it might pay to go that route and save yourself the hassle of scraping together the funds you would need for a more expensive school. 

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