With the cost of tuition on the rise, many students turn to student loans to pay for college. While student loans are an option, conduct research to ensure you get the best loan.
Only borrow what you need
Often, students fall into the trap of borrowing more money than needed, causing a financial burden in the long run. A good rule of thumb is only borrowing what you need. Take advantage of grants, scholarships, and work-study opportunities. Speak to your Financial Aid Advisor to learn other ways to pay for college.
Ask questions
The most crucial component of any loan is knowing the terms and conditions. Don’t be afraid to ask for clarification. Some loans have deadlines and may require payments to start after graduation or when starting your career.
Shopping around for private loans is important. Compare interest rates, fees, repayment options, and other concerns you may have. Ask questions like, “Is the interest rate fixed, or can it change at any time? Can I get a lower interest rate? What fees must I pay?” Your school may recommend certain lenders, but many financial institutions exist to help students pay for college.
Payments
Did you know you can make interest-only payments while still in college? Making payments helps reduce the total repayment amount. When repaying your loans, long-term is not always better. Making small payments over a longer period may cost more interest over the life of the loan. Consider a shorter-term, so interest costs don’t add up. Remember, interest accrues the moment a loan is taken out. Making payments while still in school will help in the long run.
Credit
Student loans will appear on credit reports. Use your student loans to how lenders you are credit conscious. Student loans provide an opportunity to strengthen payment history, giving lenders a positive view of how you handle money. Remember, the last thing you want to do is default on a loan. Making late or missed payments negatively affects your credit score. If a life event makes the monthly payment difficult, speak to your lender about adjusting the payment until you are back on your feet.
Student loans can be a good option for many students needing to cover the cost of tuition. Grants and scholarships, however, provide an alternative. No matter what option you choose, always take time to understand all aspects and ask lots of questions! Click here to learn more.