Loans

What can a single mother do if she wants to finish school, get a car, buy a home, or just handle a cash crisis?

Census data shows that more single mothers than ever are living in poverty.

Student Loans

Federal student loans

The Good

Subsidized federal student loans can have their payments put off if a student puts school on hold. They have protections for borrowers who fall on hard times. Student debt doesn’t usually disappear after a bankruptcy, but the government offers repayment plans based on income.

There are forgiveness programs that wipe out part, or all, of a debt under certain conditions like disability. Some borrowers can “pay” off their debt by providing a public service like teaching. (If only all loans were like these!)

The Bad

Subsidized federal loans for undergrads might not cover the entire cost of a school year. The rest of the cost of attending school can come from unsubsidized federal loans, but their interest has to be paid even during school enrollment.

Grad students have the biggest challenge. Perkins loans only pay a limited amount per year. The balance can come from PLUS loans, but those start accruing interest and demanding payments right after the student receives the money.

​How it works:

  1. Fill out the Free Application for Student Aid (FAFSA).
  2. The school sends an offer of financial aid including loan information.
  3. The government pays the interest while the student is in school, and during a grace period after enrollment ends.

Many single mothers will qualify for Perkins loans even if they have less-than-perfect credit history.

But how to pay for a more expensive school when federal loans don’t cover it all? Read below.​

Private loans

These come from banks and credit unions which will want either a good credit history or a cosigner. A financially-stable cosigner can reduce the amount of interest charged. Private loans have a lot of fine-print problems to watch for: variable interest rates, early repayment penalties, interest that isn’t tax-deductible, and no deferments in case of illness or deployments.3 Instead of private loans, check out peer-to-peer lending described below.