Do you have subsidized or unsubsidized student loans? It’s important to know which type you have and the difference between them. If you don’t know whether you have subsidized or unsubsidized loans it’s easy to find out. All you need to do is go to the National Student Loan Data System website as this is where you will find all the information regarding your federal student loans including their type, when the funds were disbursed and how much you owe on each – if you have more than one loan.
The one very big difference
The big difference between subsidized and unsubsidized federal student loans is that the government pays the interest on your subsidized loans while you’re in school. These loans are generally needs based. If you don’t qualify for needs-based loans, you will have an unsubsidized loan, which means you will be required to pay the interest on them while you’re in school. To make matters even worse, if you don’t pay the interest on unsubsidized loans it will continue to accrue and will be capitalized or added to your balance owed. You will then end up paying interest on interest and of course your balance or the amount you owe will grow.
Your best option
What all this boils down to is that if you have unsubsidized loans you should try to pay the interest on them instead of letting it accrue. The good news is that the interest on these loans is usually fairly low. For example, it could as little as $50 a month though you’d be better off paying as much as you can. We know that if you’re carrying a full 15 credit hours a semester it can be tough to take on a part-time job but you just might have to reprioritize and let your social life slide a bit as you probably don’t have much cash just sitting around. Downgrading your social life may not sound like much fun – to pardon the expression – but it’s a lot better to graduate owing as little as possible versus the average student loan debt of last year’s graduates. It was either $26,000 or $30,000 depending on which source of this information you choose to believe. That’s a lot of money these graduates will have to repay and this could have a negative effect on their lives for years to come.
About the same as a new pair of shoes
When you stop to think about it paying off your student loan interest at the rate of $50 a month is about the same as buying a new pair of shoes. You should be able to easily do this by getting a job either on- or off-campus. While these jobs typically pay minimum wage or a bit more it still wouldn’t take many hours a week or month to accumulate that $50. Where we live the minimum wage is currently $8 an hour. At this rate you might need to work less than seven hours a month to pay the interest on your unsubsidized student loans. Of course, if you were to work more hours you would have more money available to pay on those loans. Plus, working a part-time job would allow you to earn some extra cash for living expenses and also builds your resume, which could help when it comes to getting a job after you graduate.
Should you work on or off-campus?
Just as there are only two types of student loans there are only two types of jobs – on-campus and off-campus. There are pros and cons to both of these. One of the most popular of the on-campus jobs is those available through the Federal Work-Study Program. Unfortunately, this is also a needs-based program, as you would have to demonstrate a financial need, be enrolled in a degree program and maintain satisfactory academic process. The downside of an on-campus job like this is that with some schools the money you earn automatically goes towards your tuition fees. In others you’ll receive a paycheck just as if you worked off-campus. You could then use the money to pay the interest on your loans and to help with your living expenses.
The advantages of an on-campus job
One of the biggest advantages of an on-campus job is that if you go to a relatively small school you should be able to just walk from class to your job. In addition, it’s usually fairly easy to get an on-campus job. This can make it a lot easier to work 15 or even 20 hours per week. Plus, you might be able to get a job where you would work a couple of hours per day between classes instead of a four or eight hour shift at an off-campus job.
The pros and cons of an off-campus job
If you go to school in an urban area there is practically an unlimited number of possibilities for a job. You could work in a restaurant or clothing store or for a doctor or lawyer as an office assistant. For that matter, you could even create your own job by mowing lawns, babysitting or running errands. With all of these different options available, it’s likely you would be able to earn more than with an on-campus job. And you can use the money anyway you please instead of it automatically going to pay for part of your tuition.
An off-campus job can also be very good work experience. These jobs give you better exposure to the “real world” than working in your school’s library or some other on-campus job. If you were able to get a job working retail or as an office assistant this would look very good on your resume. You could also look for jobs that would be more related to your career when you graduate.
The biggest downside of an off-campus job is that transportation could be a problem. You would need to have a reliable ride, good public transportation or a car to get to that job. The cost of getting to and from your job could quickly reduce the amount of money you would get by working off-campus. In addition, you would probably be required to work a full four or eight-hour shift and you could find it hard to successfully juggle your classes and those shifts.
So which would be better?
The answer to this question is some “depends.” It will depend on whether or not you feel the convenience of working on-campus outweighs the additional income you would earn working off-campus. It may also depend on whether you would be able to get that perfect off-campus job that would be a boost to your career and would make sacrificing your social life worthwhile. Of course, there’s nothing that says you couldn’t do both at the same time or both off and on. The important thing is to weigh your options and make sure that whatever choice you make will help you earn your degree and ultimately start a career.
