Getting Through College: Student Loan Advice

As a soon-to-be college student (or the proud parent of one), the prospect of taking out student loans can be intimidating. Grants and scholarships are great if you can get them, but they don’t always cover the full cost of tuition and books. Before you sign on the line, carefully consider your options and know what to expect.

Start your student loan search by looking at the safest options first. These are generally the federal loans. They are immune to your credit rating, and their interest rates don’t fluctuate. These loans also carry some borrower protection. This is in place in case of financial issues or unemployment following your graduation from college.

Know your grace periods so you don’t miss your first student loan payments after graduating college. Stafford loans typically give you six months before starting payments, but Perkins loans might go nine. Private loans are going to have repayment grace periods of their own choosing, so read the fine print for each particular loan.

Do not default on a student loan. Defaulting on government loans can result in consequences like garnished wages and tax refunds withheld. Defaulting on private loans can be a disaster for any cosigners you had. Of course, defaulting on any loan risks serious damage to your credit report, which costs you even more later.

Know what you’re signing when it comes to student loans. Work with your student loan adviser. Ask them about the important items before signing. These include how much the loans are, what kind of interest rates they will have, and if you those rates can be lowered. You also need to know your monthly payments, their due dates, and any additional fees.

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Be careful when consolidating loans together. The total interest rate might not warrant the simplicity of one payment. Also, never consolidate public student loans into a private loan. You will lose very generous repayment and emergency options afforded to you by law and be at the mercy of the private contract.

Consider using your field of work as a means of having your loans forgiven. A number of nonprofit professions have the federal benefit of student loan forgiveness after a certain number of years served in the field. Many states also have more local programs. The pay might be less in these fields, but the freedom from student loan payments makes up for that in many cases.

Before accepting the loan that is offered to you, make sure that you need all of it. If you have savings, family help, scholarships and other types of financial help, there is a chance you will only need a portion of that. Do not borrow any more than necessary since it will make it harder to pay it back.

The better your understanding of student loans, the more confident you can be in your decision. Paying for college is a necessary evil, but the benefits of an education are undeniable. Use everything you’ve learned here to make smart, responsible decisions about student loans. The faster you can get out of debt, the sooner you can earn a return on your investment.