Student loan debt for Americans has reached a staggering $1.5 trillion and continues to grow. Several candidates on the campaign trail have touted plans to either reduce student loan debt or wipe the slate clean for borrowers. This comes at a time when many people are asking, should I take out a student loan.
If this is you, you’re not alone. Student loan debt is a huge issue. There are people who are paying more on their loan payments than they are in rent.
The unemployment rate is low but does this mean college graduates are working in the careers they earned their degrees in. Without the income to repay debt there is a growing number of educated individuals that can’t afford to buy homes or cars.
In the end, the overall economy will suffer.
Keep reading for tips on the best ways to take out student loans and not go broke.
Should I Take Out a Student Loan?
Earning a college degree is a right that we all have. Sometimes paying for school comes with taking out student loans.
Loans are not always a bad thing. Borrowers need to be educated on the ramifications of not make wise decisions. Taking more than you need can lead to huge bills in the end.
Educate yourself on the loans and the repayment options. If possible, begin to pay down your loans while you’re still in school.
Use a Student Loan Repayment Calculator
Before accepting student loan offers, look for a repayment calculator to see what the monthly payment will be. The calculator will also show the amount of interest you will owe. When taking out multiple loans each semester remember to add them together.
Search for Scholarships and Grants
Each year college students allow millions of dollars worth of scholarships to go unused. Even more in Pell grants are left on the table. Sometimes students believe it is easier to just take out a loan, but years later that can hurt them.
Any amount of free money means taking out less in student loans. Five-hundred dollar scholarships can add up. Non-profits, social organizations, corporations, and churches often have scholarships that students can apply for.
There are also numerous scholarships geared towards minorities, women, children of military personnel, and the list goes on. Finding scholarships can take time, but when you consider the years to pay back loans, it’s worth the investment.
Put Your Special Talent to Work
Did you know colleges have scholarships that go unused? I’m not talking about the ones listed above. I’m talking about sports scholarships.
Can you play tennis, what about bowling, archery, or even sailing? Football and basketball get a lot of attention but other sports are played at the collegiate level. A school that is not dominating in a particular sport may have spots and unused scholarships.
Inquire at the schools on your list and see if you can use your skills to offset college tuition.
Apply for Work-study
The time to take out student loans is after you have exhausted all other options. Colleges and universities have federally funded work-study programs. These are part-time opportunities that allow students to earn money.
The positions are offered through the university and include jobs both on-campus and within the community. Most-likely the student will be working as an assistant for the department he or she is earning a degree. Positions can also include working in the bookstore, giving college tours, or helping schools or non-profits.
Each college has different rules, so check with the financial aid office to see what is available and how to apply.
Register for FAFSA
Every high school student preparing for college needs to create a FAFSA account. FAFSA is the acronym for Free Application for Federal Student Aid. This is a government-run website that allows potential students to determine their eligibility for financial aid.
Financial aid includes grants, loans, and work-study. The website takes information on the students and parents to determine eligibility and give an estimate on available aid. Independent students do not need to provide their parent’s information.
Government secured loans include the Federal Direct Stafford Loan, the Perkins Loan, and the Federal Direct Plus Loan. Federally backed loans have lower interest rates and better repayment options. However, if you fall on financial hard times, you cannot include these loans in bankruptcy filings.
Federal student loans and grants also have maximum limits. It is always best to exhaust grants and scholarships before accepting loans. When offered a student loan, you are not required to accept the full amount.
Are there Student Loans for People with Bad Credit?
If you are an adult and have messed up your credit you’re probably hesitant about returning to school because of the cost. You may be wondering how to take out loans for college if you have less than perfect credit.
Believe it or not, there are bad credit student loans for people with a poor credit history.
Regardless of your credit history, you should still complete the FAFSA application. If you’re not offered a student loan, consider a private lender. You may need a co-signer with good credit but it’s worth a try to get the best interest rates.
If you can’t get a co-signer, still try to secure the loan on your own. There are plenty of lenders willing to loan money to people with bad or no credit history. You may have a higher interest rate, but if earning your degree is important it’s worth it.
Your financial situation today doesn’t dictate what it will be after graduation. You can refinance your student loans later. While in school, work hard on your grades and on improving your credit.
Will you take out a Student Loan?
Stop asking, should I take out a student loan and start using these tips. No one should have to bypass college due to cost. Just be smart about taking out loans.
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