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Tag: financial aid
Life of a Nursing Student: Spend 3 Days with ME!
Federal Loans
I’m my previous post I talked about how I paid for nursing school and to really understand how things happen for me they way they did you need to understand federal loans, specifically subsidized and unsubsidized loans. I’ve decided to just make a separate blog post about so my previous blog post wouldn’t get to lengthy. So let’s get into it!
Federal Subsidized Loans
This a type of loan given out by the government to students pursuing higher education at a competitively low-interest rate. The loan normally lasts about 4 years (it does vary) and repayment begins 6 months after your after graduation date. The beauty about this loan is that you as the loanee pays no interest! The federal government pays the interest for you until you graduate.These are the BEST type of student loans offered.
Subsidized Loan Scenario: Let’s say I borrowed $100 from the government and the interest rate was 10%. $100 x 0.10 renders $1. So every month, assuming you aren’t paying anything pack yet, $1 worth of interest would be added to my original bill of $100. At the end of one year I would owe the government $12 ($1 for every month) in interest in addition to the original loan amount of $100 for a grand total of $112. With a subsidized loan, after one year I would only owe the government $100 because the interest of $12 was paid by the government for me.
Federal Unsubsidized Loans
This a type of loan is again given out by the government to students pursuing higher education at a competitively low-interest rate. The loan normally lasts about 4 years (it does vary) and repayment begins 6 months after your after graduation date. What differentiates subsidized from unsubsidized loans is that the government does not pay the interest for you. Unsubsidized loans begin accruing interest the moment the loan is processed and that interest will keep accruing. This how someone can take a $10,000 loan out at end up paying well over $20,000 back in the long run. Interest can sneak up on you so be careful!
Unsubsidized Loan Scenario: So I borrowed the same $100 from the government and the interest rate was 10% but this time it’s an unsubsidized loan. $100 x 0.10 renders $1. So every month $1 worth of interest would be added to my original bill of $100. At the end of one year I would owe the government $12 ($1 for every month) in interest in addition to the original loan amount of $100 for a grand total of $112. With an unsubsidized loan, after one year I would owe the government $112 because the isn’t paying the interest for me.
These are really watered down examples of how this works. $12 may not seem like a whole lot to pay back. But what if I had a $5,000 unsubsidized loan at a 4% interest rate? That means every month $200 in interest would be added to my total bill and in one year I would go from owing $5000 to $7,400! That’s a huge difference! And if you read my ADN vs BSN blog post you know that a deciding factor when I was choosing a nursing program was cost.
Now that you know all this information, you might ask well why doesn’t everyone just take out subsidized loans for whatever amount is needed? The simple answer is that your lender AKA the government wouldn’t make any money and this is all a business at the end of the day. The government puts a cap on the amount a student can request for subsidized loans per semester depending on what year the student is in.
Here’s another example….
Let’s say, hypothetically, I am attending a 2 year nursing program and the tuition is $5000 a year and of course I need federal loans to pay for school. The first year I take out a $10,000 loan. The government will only give me $3500 in subsidized loans for the first year and if I can’t come up with the additional $6500 from another source, that’s $6500 in unsubsidized loans. The second year I take out another $10,000. But as a second year the government will let $4500 out of the $10,000 be in subsidized loans. But again, that’s still $5,500 in unsubsidized loans.
The $6500 starts accruing interest the moment it is processed. So for 2 years while I am in school that $6500 bill is slowly growing. If the interest rate is 4% that’s an extra $260 being added to the bill every month for 2 years or 24 months. At the end of the two years, I’ve graduated from nursing school but my original $6500 bill nearly doubled into a final bill of $12,480 in addition to the $3500. In total, I went from owing $10,000 for the first year of the program to owing $15,980 for the first year.
For the second year that $5500 at the same interest rate of 4% will cost me $220 every month for 12 month. At the end of that final year of school my loan went from $5500 to $8140 and I still owe $4500 in subsidized loans. So my total second year of nursing school went from $10,000 to $12,640. So I might have thought my nursing school program was only going to cost me $20,000 when in reality I will end of owing at least $28,620!!! That’s almost an additional $10,000 in interest alone. This is how people end of spending the rest of their lives paying off student loans.
Below is a chart explaining in-depth how subsidized and unsubsidized loans are capped for every school year.
Now student loans are a necessary evil. I do believe that the system is flawed but I also believe in investing in yourself and your education. And if I had to take out loans to go to school I would do it but if I can avoid it I will try my hardest. I hoped this article helped someone out there thinking about pursing higher education. Until next time, see ya!
How I’m Paying for Nursing School
As soon as I got into nursing school I immediately started to think about the financial implications of going back to school full-time. This was a one year accelerated program and it was strongly recommended that we cease working so I quit my job. The job that I was working at was Monday through Saturday from 9am to 6pm so even if I wanted to continue working there would be no way because I had class Monday to Friday from about 8 to 4pm. I was going to go from a steady paycheck to nothing for an entire year at minimum.
If you read my ADN vs BSN blog post you know that a deciding factor when I was choosing a nursing program was cost. My nursing program cost roughly about $10,000 and that figure included tuition, books, uniform, and equipment. I didn’t have that kind of money stashed away and no one in my family was in any position remotely to help me with this financial burden. In fact I was regularly helping my family members while I was working. Luckily I had about $1,000 saved up from working and I decided that this would have to be my emergency fund for the duration of this program. I knew the days of getting my hair and nails done, random shopping sprees, and randomly dining out were over. I went back to doing my own hair and nails, I bring a lunch everyday, and I rarely eat out. Even with all of this it is still a financial struggle for me. But I’ve managed this far. But how have I managed?
Loans
I knew I needed to apply for a loan to pay for the program. Like I said $10,000 is a lot of money for me. Thankfully I stayed in state for my undergraduate education and in high school I also received a 4 year scholarship so I graduated debt free from undergrad. Because of that I hadn’t really utilized my supply of federal subsidized loans so I was planning to finally tap into that reserve to pay for school. If you want more information about federal loans the differences between subsidized and unsubsidized loans check out my next blog post.
At the school I attend you have to apply for financial aid in advance. The mistake I made was that I didn’t inquire about loans until after school had started. I was told I had to wait until everyone who applied for financial aid before me to be processed. After that my application would be processed. But students at my school had applied in August of 2015 for financial aid for January of 2016 so I was 4 months behind. basically I was all the way at the end of the line and I wouldn’t be receiving any funds of any sort any time soon. I ended up paying for my first semester with a credit card which I’ll speak more about in my next point.
Luckily, I am only attending a one year program so I knew that I wouldn’t need loans for an extended period of time and I wouldn’t need more than $10,000. In addition to that, my lender treats my loan as if I am receiving a 4 year degree even though I am in a one year accelerated program. So I’ll be graduating in December of 2016 but I won’t be required to pay back any of my loans until Spring of 2020 interest free! This is wonderful because I know I’ll be entering the work force within the next year and I’ll be able to pay off the entire loan before my repayment date.
So what really worked in my favor was that I still had federal subsidized loans available and my lendor is giving me 4 years interest free until I have to begin repayment. However, because I waited so late to apply for financial aid I was told I wouldn’t be receiving any loan money until the summer time. I was told this in February and the summer time was a looooong ways away. So how did I manage my finances for 7 months with no job?
Credit Cards
I knew that starting a program like this might incur various costs and I didn’t really have cash to pay for everything. I have a decent credit score and I always paid my bills on time. So I opted to open up a new credit card with a $10,000 limit and 0% interest for 15 months. I already had two other credit cards but they had lower limits and were no longer interest free. I also made sure to pay those credit cards off before starting school to avoid issues in the future. Opening a new credit card seemed like the best choice for me and it was probably one of the single best financial decisions I made. This card is basically how I paid for my tuition, books, uniform, incidentals, gas, and everything else until my loan funds disbursed. I know credit cards aren’t for everyone but I’m pretty disciplined and it has worked for me. My plan is to take out $4,500 in subsidized loans in the fall to hold onto in the event that my credit card bill gets too high for me to pay off by the time the 0% interest period is over. That way I can pay off my credit card and still owe no interest until 2020. Hopefully I’ll obtain a job and be able to pay off all my debts within a year or two.
So that’s how I paying for nursing school right? But wait there’s more….
Scholarships
Scholarships are the best. Really. Free money, you can’t ask for anything better. So from January to May, I was still living this broke life patiently waiting for my loan funds to disburse and racking up debt on my credit card. But in mid-May a huge blessing fell into my lap. I was basically offered a $9,000 scholarship for my nursing program. The crazy this is that I hadn’t applied for it either. It was a departmental scholarship where the students were chosen by administrators in the nursing department to receive this scholarship. I was elated. Now I’m basically going to school for free. I feel so blessed and I am so humbled. It’s been two months since I got that email but I am still in awe. After I got that news I knew as soon as the funds from my loan were disbursed I would immediately pay them as well as portion of my credit card debt. But this is my story and this is how things worked out in my favor.
If you are the person reading this blog still trying to figure out what you are going to do financially keep pushing and keep believing. I prayed on my financial situation and God didn’t disappoint. So I want you to keep believing and know that you are choosing an AMAZING career path. You’ll face struggles but it will be more than worth it in the end. I hope this story helped someone out there. If you have any questions please comment below. Until next time, see ya!
The Black Nurse 