Student Loans have become a paramount part of a college education. As few students are able to foot the bill on their own the need for outside help marks most scholastic endeavors. The rate for student loans in the U.S. is higher than ever as well as the debt such loans eventually accrue. It is estimated that about 32% of individuals bearing student loans have an active interest in paying them off. If you are a perspective student looking for loans and want to make the best decision for your specific circumstances, here are some key factors to consider that can help you make good.
Look at Loans Last
Student loans are one aspect of financial aid. The package provided by the government to help students afford school has other facets. One facet is grants. Grants are provided by organization and provide funds that do not have to be paid back. Additionally, students can also earn scholarships for a wide range of qualifications. Scholarships also do not require the funds to be paid back.
So when looking at financial aid, exhaust the facets that do not require repayment first before utilizing loans. You will probably still need to pull out a loan but it will not be for that much. The smaller the loan the smaller the amount you are on the hook for.
Odds are you will take out more than one loan in the course of your scholastic career. Often times multiple loans will come from multiple sources. So if you are in for the long game and plan on continuing straight up to doctorate status be sure to keep track. Organization is key because the whirlwind of student loans can be quite confusing.
Not only do you have to consider the type of loans you pull out, but you also have to remember the companies offering them. Federally funded loans also come with the possibility of forgiveness or relief. If you opt for an organization that helps reduce or pay off your loans you will need to keep track of their information as well.
Organization is important to avoid the horror stories of borrowers who lost track and fell behind on payments. The last thing you want is a company adding late fees and interest to a loan you are not aware you have. It also protects your from being scammed if you know the actual information of the legitimate services you deal with.
Know the Types
As aforementioned there are two types of loans available to students. The two categories for federal loans are subsidized and unsubsidized. The difference between the two is that subsidized loans reserve for students with financial aid. The government will handle the interest of these loans as long as the student is in school. Unsubsidized loans cover all students. They do not bother with any financial need. The government does not handle the interest of these loans so it will accrue as the student is in school. You need to pay attention to these types as a subsidized loan will cost you less in the long run.
Loans Do Not Come Due Right Away
Student Loans come into affect six months after graduation. So it is not something you immediately have to deal with. This is good to consider as you can make a plan of attack. This means getting a good paying job or arranging deferment if necessary. Do not waste the six months, however, as you repayment is something you need to prepare for.
Pay Off Interest
A smart move many make is to pay off interest while in school. This is a great option as it reduces the amount needed to repay once out of school. Interest payments are nowhere near as high as loan payments so they are more affordable. This is only needed if the loans you take out are unsubsidized.
Do Not Take Out Too Much
One temptation many students face is that often the loans divvied out are more than the financial burden of the school. This means that after everything is paid for there is money left over. This is great as it can help with cost of living but if it is not needed than a smart move is to refrain. If you do not need to accept all the loans offered than do not do it. Remember, it may give you extra money now but you will have to pay it back. The fewer loans you pull out the less money you will eventually owe. So pay for your school primarily.
Keep Good Credit
Good credit opens a lot of doors in the real world. Some of those doors actually pertain to student loans. As forgiveness and repayment service have increased numerous start-up companies have sprouted to offer options. One such option is refinancing. Borrowers who have excellent credit scores can actually refinance their loans. This leads to better rates and more affordability. It takes some pretty high credit scores to garner refinancing options, however, but not to worry there are more options available.
Even going the standard route of repayment individuals have better options with good credit. You do not have to worry about repayment now as you are going into school but eventually you will. So maintaining positive credit is a good step to take while in school to repair for easier loan repayment later on.
Research Loan Forgiveness and Assistance
As you go to school and quest for that degree a good idea may be to look into loan forgiveness. Loan forgiveness programs have increased as of late and are as commonly used as loans themselves. Organizations that offer forgiveness vary as do loan assistance programs. Unfortunately, there are also many scams out there that can take you for a lot of money. One way to avoid this is to approach it safely.
Researching loan forgiveness can hook you up with beneficial companies that offer legitimate help. Loan forgiveness requires a public sector job that serves the government in some capacity. There are many types of occupations that qualify such as teaching, military service, not-for-profits, and law enforcement. Knowing what is required to qualify can aid you in garnering forgiveness once you graduate. If you plan ahead and are smart about it you can save yourself a lot of money.
Researching assistance programs can also help you pinpoint what you need. You can get the best assistance for your specific situation, plan to meet whatever qualifications are required, and avoid fraudulent scams. It is a good idea to make preparations for loan repayment while you are still in school. Especially, if certain things you do while attending affect your eligibility.