Ask The Money Coach

Posts Tagged ‘grants’

Question:

I have a question from one of my readers, who wanted to know about what to do with regard to student loans that they’re not able to pay. The person said, “I currently have about $30,000 in student‑loan debt and have not been financially able to make any payments in about two years. I’ve been out of school since 2006.

Right now, what I make isn’t enough to pay my monthly expenses, such as rent, utilities, groceries, medical bills, et cetera. I was wondering if there are any programs, grants, or scholarships that I can apply for that will help pay off my student loans.

I’m scared to go into the military due to the war, so I don’t feel secure going that route. I also don’t have a state job, currently, or any kind of career that would qualify for the forgiveness program. Do you know of any other options?”

Answer:

Yes, I actually do know of a couple of options with regard to work‑related programs that can help you to pay off student loans. The key one is via the Federal Student Loan Repayment Program. It’s administered through the Office of Personnel Management.

Essentially, if you will work for any federal agency in the government, you could be eligible for student loans to be paid off by the federal government, up to the tune of $60,000. This program will pay off, specifically, $10,000 per year of your federal student loans, up to $60,000.

Again, the catch is you have to agree to work for some agency within the Federal Government. It could be for Amtrak, which is sort of a quasi‑government agency. It could be for the Smithsonian Museum. It could be for the Department of Defense.

It doesn’t have to be for a Washington DC‑based federal entity. You could be working in any state in the country and potentially qualify for the Federal Student Loan Repayment Program. So that’s one.

In terms of grants or scholarships that will help you pay off your student loans, no, I don’t know of any. To my knowledge, there are no such programs. I’ve written an entire book about the subject of student loans. The book is called “Zero Debt for College Grads: From Student Loans to Financial Freedom.”

You mentioned teaching jobs that would qualify for loan forgiveness. Yes, there are certain careers; service‑based careers that would help you qualify for loan forgiveness. Generally speaking, those are available to professionals who work in the following areas: teaching, nursing, the medical field, doctors. People who work in the legal area, as well, often qualify.

Generally, these kinds of loan‑forgiveness programs are deemed appropriate and necessary to help people with student loans who are serving under‑served communities. So, maybe you don’t have to be a teacher, but if you are a social worker, if you are a lawyer helping an indigent group or population, if you are a nurse helping sick people in an area where there is a critical shortage of nurses, those could qualify you for some student‑loan relief programs.

I hope this information is helpful to you. You can certainly visit my blog, AskTheMoneyCoach.com, type in the keywords, “student loan repayments” or “student loan forgiveness,” and read up on the articles that I’ve written on this topic.

Recommended reading: Zero Debt for College Grads
Related video on YouTube

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Q: Would it Make Sense to use My Retirement Savings to Fund My Master’s Degree? I Have No Debt, Some Savings, Twin Toddlers and a Husband Who is Currently Out of Work. My Master’s Degree Program Will Cost About $50,000.

A: For many reasons, I think it would be a very bad idea to use your retirement savings in order to finance your Master’s degree. First, there are better financial options to fund your advanced education. Second, since your husband isn’t presently working, if times get particularly tight economically, you may need to access some of those retirement funds to help keep your family afloat. (Note: If you do need the money in the future, take a loan from your retirement plan – not a withdrawal. That way, you’ll avoid paying the IRS ordinary income taxes and a 10% penalty on the distribution.) Lastly, you’ve worked hard to build up a decent retirement nest egg. It would be a shame (and risky) to deplete those funds and jeopardize the financial security that your retirement assets will provide during your Golden Years.

Smart Ways to Finance a Graduate Education

Here are some alternatives to help you finance your Master’s degree program.

Your Employer
Since you are working, definitely start by asking whether your employer has a tuition assistance plan. Many companies will pay for tuition, or at the very least will offer a stipend to cover the costs of books and supplies.

Scholarships
Also begin aggressively seeking out scholarships for which you may qualify – based on everything from your gender and ethnic background to your major and certain hobbies you have. Consult a good online database, such as http://www.FastWeb.com, which lists thousands of scholarships.

Too many students (both undergraduate and graduate) fail to adequate explore the multi-billion dollar scholarships arena, and then they say “I couldn’t find anything for which I qualified.” Well, you have to make your scholarship search the equivalent of a full-time job. Plan to spend at least 30 hours a week – for three to four weeks – hunting for this free money. I know that’s a lot of time. But if you invest the time and energy now, the long-term financial payoff can be huge – well worth the short-term sacrifice you must make to find, apply for, and secure these resources. As a target goal: plan to apply for at least 12 scholarships. This will greatly increase your odds of receiving scholarship money.

Grants
Be persistent in finding grants too. Like scholarships, they don’t have to be repaid. Find grants via a specific department at the college you are considering, like the Business School or the Science Department.

Work Study
Also, the financial aid officer at any school you’re considering can tell you about Work Study opportunities to pay for college. Work study programs – where you work, say, in the library or the computer lab and get paid or receive a discount on tuition – help minimize your school fees or, for some people, the money you spend on room and board.

Paid Internships
You should also seek out paid internships to help you foot your college bills. This option is obviously most feasible for those who don’t have full-time jobs. In years past, students interned without pay, just to get valuable work experience and make connections. Today, with the high price tag of a college education, you don’t have the luxury of working free of charge. So investigate paid internships in your industry where you get a decent paycheck, along with work experience and access to professional colleagues and mentors.

Student Loans
Finally, I know you want to avoid college loans, but that’s not always 100% possible. If you’ve exhausted all the options listed above, and still come up short, then you should consider student loans. Always apply for federal loans first – not private loans. Federal loans carry lower interest rates, have fewer fees, and offer better forbearance, deferment and loan forgiveness options.

By exploring all of these financing sources, and getting creative with your own budget, you can pay for that advanced degree – without withdrawing your retirement money and hurting your chances of having a secure retirement.

Q: I Want to Go Back to College To Further My Education But Don’t Want Student Loans. How Can I Get Grants and Other Money So I Don’t Have College Debt?
A: There are lots of ways to go to school without taking out a ton of student loans. If you’re working, start by asking whether your employer has a tuition assistance plan. If not, begin aggressively seeking out scholarships for which you may qualify – based on everything from your gender and ethnic background to your major and certain hobbies you have.

Consult a good online database, such as http://www.FastWeb.com, which lists thousands of scholarships. Be persistent in finding grants too. Like scholarships, they don’t have to be repaid. Find grants via a specific department at the college you are considering, like the Business School or the Science Department. Also, the financial aid officer at any school you’re considering can tell you about Work Study opportunities to pay for college.

Work study programs – where you work, say, in the library or the computer lab and get paid or receive a discount on tuition – help minimize your school fees or the money you spend on room and board. Lastly, you could seek out paid internships to help you foot your college bills. In years past, students interned without pay, just to get valuable work experience and make connections. Today, with the high price tag of a college education, you don’t have the luxury of working free of charge. So seek out paid internships in your industry where you get a decent paycheck, along with work experience and access to professional colleagues and mentors.

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