How exactly do scholarships work??

How does getting loans and outside scholarships work?

• Let's say I take out a $10,000 private loan to pay for college that covers all of my tuition. Then I get $5,000 in scholarship money from outside sources at the start of my freshman year. How does that work? Since it's a private loan that's already been taken out, would I be able to reduce it to $5,000? I've been applying for lots of scholarships, but for a lot of them the winners won't be announced until sometime this summer or later. So I just wanted to know how that would work.

• Answer:

  1. If you are still a high school student, please hold conversations with a high school counselor and ask these questions so you can learn the ins and outs of higher education financial aid. If you are not in high school or if you are currently enrolled as a student in a college or university, make an appointment with a financial aid adviser at your school or the one you wish to attend and ask your questions. You can meet in-person or talk over the phone. 2. Unless you have an excellent credit score (high credit rating), you will probably not be considered a good loan risk for a private loan without having a co-signer who has an excellent credit score/high credit rating. Plus, taking out a $10,000 loan, especially a privately funded one which will have a hefty interest rate and which will require you to start repaying it soon after you sign the loan agreement, for just 1 school year is not recommended by student financial aid experts. Student fin. aid experts recommend students take out no more than $5,000 in loan funds per full school year, with a maximum loan total of no more than $20,000 for a 4-year school over the full 4 years. Please read this online article from the well-respected publication US News and World Report regarding student loan advice: How Much Money Should I Borrow For College? http://www.usnews.com/education/best-colleges/paying-for-college/articles/2009/06/09/how-much-money-should-i-borrow-for-college Many people who took out private student loans now live to regret those decisions because of the difficulty they have with repaying those loans in a timely manner. 3. Look at the US News and World Report web page, Paying for College, and click on the links to the articles there and read the advice given: Paying for College - US News and World Report http://www.usnews.com/education/best-colleges/paying-for-college 4. If you do take out a loan (or several different loans) totaling $10,000 and signed the promissory note/s (loan agreement papers), the lender/s will not allow you to reduce the loan amount retroactively. You can repay some of the loan funds right away, if you wish. It will be up to the lender on what is possible for you to do. You will have to speak with a real person, a representative of the lender/s. 5. If you have completed and submitted the 2012-2013 FAFSA (Free Application for Federal Student Aid - http://www.fafsa.ed.gov ) you will probably be eligible for some Federally funded student loan money, which will be a much better deal than a private student loan (if you can even obtain one.) 6. If the school you wish to attend or are attending is a for-profit/career/proprietary college/university, be especially careful regarding taking out loans (particularly private loans) to fund your education. This article from the newspaper USA Today from Sept. 29, 2010 explains a bit about why a for-profit/career/proprietary school choice may not be a good one for a student. http://www.usatoday.com/news/education/2010-09-29-1Aforprofit29_CV_N.htm For-profit/career/proprietary schools are businesses, with the main focus of earning profits for their shareholders. Some are fine; some are not. Librarians--Ask Us, We Answer! Find your local Public Library at: http://www.publiclibraries.com/ Find your College/University Library at: http://lists.webjunction.org/libweb/Academic_main.html Best wishes