That's My Job: Letting the professionals speak

What better opinion can you get than a professional's? Based on that logic, I went to my own financial advisor to get her perspective on a few of the issues facing student borrowers today. She was gracious enough to comply, and below is our Q&A.

Enjoy.

Q: What is the difference between private and Federal Stafford loans?

A: Students should definitely try to go for Stafford Loans first. Freshman will get the least amount of money, but it increases as thy progress through school.

Q: From 2008-2009 the percentage of first year college students taking out private loans increased from 14-43%. Why do you think that is?

A: It probably has to do with the economy. Parents are likely finding it more difficult to help students with the costs of college. Federal Stafford loans provide a reasonable amount of money, but it still requires a degree of frugality to use them most efficiently.

Q: What advice would you give to a freshman taking out a loan for the first time, maybe when they weren't planning on needing to?

A: I would recommend that they use only the amount they need, but not the full amount they're given, unless withdrawal becomes absolutely necessary. If you take all of it out at once you'll be sure to spend all of it. I've had students come in before who used their loan money for a wedding. Be smart about it.

In some cases the school can offer grants to those in extreme circumstances, if they genuinely need it. If you're about to be evicted, for example, or you don't have enough money for food, the school has special grants to help.

Q: And what advice would you give a high school senior beginning now to look at their options for financing college?

A: Students will benefit greatly if they get a job, save their money, learn to budget, and learn that it's time to grow-up. Saving is the most important thing they can do. A Stafford loan will cover more or less the cost of tuition and rent. Books and food should really be paid for by saved money. The best thing anyone can do for themselves is to save money.

Q: There is the TEACH grant program, which offers grants to students who will teach in a low-income district after graduation. Does BYU-Idaho participate in the TEACH grant program?

We don't endorse the TEACH grant here at BYU-Idaho. The grant requires that you teach in a low-income school, and if for any reason you can't comply—if you can't find a teaching job, you get fired, the school improves from low-income to normal—the grants become loans, with a retro-active interest from the day it was given to you.

It's estimated that 70-80% of these grants will become loans because the requirements were not met. Really it's just a thing some politicians cooked up to look good. There's no way to ensure that the borrowers will be able to teach where the need to, in a low-income area.