The Unsubsidized Stafford Loan is reserved for education expenses, the following qualify as education-related expenses:
  • Tuition and Fees: This includes the cost of required equipment, supplies and materials.
  • Books and Supplies
  • Transportation
  • Dependent Care Expenses
  • Disability-Related Expenses: These types of expenses could be services, personal assistance, transportation, equipment and supplies related to the disability.
  • Loan Fees: It includes the origination and guarantee fees.
  • Cost of First Professional Credentials (licensing/certification fees)
Is the reason you are interested in increasing your loan listed above?

If you answered no, then your financial aid is not a good choice to look at to cover the expense. Perhaps, you should talk to:

  • Your local banker
  • A family member
  • A retirement plan you may have
  • If you own a home, talk to your mortgage company
No matter what the situation, finding out what created the unexpected need for additional funding is important.
Good Debt vs. Bad Debt

It is almost impossible to live debt-free. Mortgages, car loans, credit cards, student loans all are necessary at times in our lives, but too many of us allow debt to get out of hand.

Good Debt is anything you need but cannot afford to pay for up front without wiping out cash reserves, such as:

  • Mortgages
  • Car Loans
  • Student Loans for tuition

Bad Debt is anything you want but can’t afford that you go into debt for. The worst is credit card debt, since it typically uses the highest interest rate, such as:

  • Costly Trips
  • Daily Expenses
  • Better Car
  • Better Home
Is the amount of money you need for GOOD DEBT or for BAD DEBT?

Why a little more debt can be a bad thing

Debt encourages you to spend more than you can afford.There’s something about debt that can continue to make you spend, even though you can’t really afford the payments. Part of the allure of debt is the fact that you can get the emotional high from getting new things now, without having to part with the money now. In fact, it can feel like you’re getting something for nothing. But eventually, that spending will catch up with you.

Debt costs money

Even though debt feels free when you first create it, it is not really free at all. In general, you pay a price for the debt you create. That price comes in the form of interest. The higher the interest rate, the more you will end up paying for your debt. Also, the longer it takes you to pay off and the higher your debt load, the more interest you will pay. The only exception is an interest-free loan or credit card promotion.

Debt borrows from your future income

Anytime you take out a loan or charge something on your credit card, you’re simply borrowing from the money you hope to earn in the future. Do you really want to spend your money paying for something you’ve already used up and don’t get much value from anymore?

Debt keeps you from accomplishing your personal financial goals

Monthly debt payments limit the amount of money you have to spend on other things, not just retirement, but the trip you always wanted to take or Christmas presents for your family. The more debt you accumulate, the more your monthly payments will be and the less you have to spend on everything else.

Debt can keep you from owning a home

Credit card, auto, and student loan debt are all considered when you make a mortgage application. If your other debt payments are too high, you may get turned down for a mortgage loan. That means, you’ll be stuck renting until you pay off some or all of your other debt.

Debt can lead to stress and serious medical problems

When you have debt, it’s hard not to worry about how you’re going to make your payments or how you’ll keep from taking on more debt to make ends meet. The stress from debt can lead to mild to severe health problems including ulcers, migraines, depression, and even heart attacks according to a poll done by Associated Press and AOL.

Debt can hurt your marriage

Debt puts unnecessary pressure on the household’s finances and creates a lack of financial security for your spouse and your children. You may argue about who’s creating debt, how much debt is too much, and who’s responsible for the debt that’s accumulated. These fights can escalate and lead to a breakdown in the marriage.

For Consumer Disclosure information, please click here.