Education has been made easier with the availability of student loans. This has given people the chance to study without feeling too financially constrained or even dropping out due to insufficient tuition fees. While they are a good thing, people need to be careful on how much they ask for. Put in mind that the student loan has to be repaid after school.
Student loans are of two types, federal and private student loans. Both are channels of getting funds for your college life. After graduation, there’s a grace period of 6 months which after that, you are expected to start repaying the student loan debt.
Before borrowing any student loan, it’s important to have a look at these tips to help you make the most out of them.
Borrow what you need
Before accepting a loan offer, it is essential to look at how much money you need for your education life. Consider your family’s contribution, your financial aid award as well as the cost of living while in college and get to have an estimate of how much you may need. You don’t have to accept the whole amount of student loan given.
Know the terms of the student loans
Make Google your friend. Find out how federal loans work. What are their terms, the repayment period and the terms of student loan forgiveness? Contact a financial aid officer who will explain in details how the loan works. Get to know the pros and cons of applying for such a loan. Consider the interest rates and the rules in case you fail to pay the loan in time. After reviewing all the details, once you decide to go forward, ensure you apply before the deadline for consideration.
Consider private loans
Sometimes, the amount of federal student loan you get may not be enough to cover all your costs. Private student loans are a good alternative.To find out more on private loans, have a look at https://www.crediful.com/best-private-student-loans/. Sometimes, your college may have a list of recommended private loan providers. Carefully go through them, compare their interest rates and repayment period options. Note, you don’t have to necessarily use those that are on the list, however, get some financial advice from somebody who understands such loans well before committing yourself.
Find a part-time job
What if you had a part-time job? The money would be streaming in which means you would not need much financial help for your studies. Find a job that you can work during your free time like social media management to bring in some cash that could be used for your upkeep and some towards your education. Such a strategy will help you not take too much student loan debt. Technology has been a lifesaver. Find your passion and utilize that to get a job. You may love blogging about beauty or travel, get a company that specializes in such and approach them. There are so many online jobs that you can do and earn at the same time study.
Understand the dynamics of the loan
Before signing, have a look at the specific details. What is the total cost of the loan inclusive of the interest rate? There is the fixed rate and the variable rate. Could there be a possibility of negotiating the interest rate to make it lower? Are there any extra fees involved for approval of the loan? Do your research well and understand all the terms used for better judgment.
Make partial payments while still in college
A trick to reducing your student loan debt is making partial payments while you are still in school. It does not mean a hefty amount; try minimizing your expenses and work towards repaying the debt. By the time it’s graduation time, you will find that the amount to be paid has reduced. Such a move will help you develop a culture that is keen on not overspending. It is also a way to help you create new ideas for investing as you cut down your expenses significantly.
Student loans are highly beneficial, however; people make some common mistakes when it comes to repaying.
- If you have several loans, you may forget about some which end up not being paid. Record all your student loans and the repayment debt to avoid hefty penalty fees by the lenders.
- While still studying, you have to provide contact information when applying for the loans. Once you graduate, your contact details may change which includes the physical address. This may cause a delay in receiving loan statements which in turn leads to late loan repayment. Update your contact information for timely receipt of statements to avoid late payment.
- Choosing a long repayment plan means more interest with less monthly payments. In case you have a stable income, go for high monthly payments which mean a shorter repayment period. When you spread out for longer years, you will end up paying more money.
- In case you are a co-signer, ensure that the borrower pays the debt in time as defaulting will affect your credit score as well.
The type student loan you pick depends on your needs and preferences. Do not rush into making decisions without consulting. Put in mind that you could end up paying for this debt over two decades depending on the amount you apply. Consider other alternative ways of borrowing such as getting financial support from family members, grants and getting a job.