College can be a very rewarding experience. For many young adults, it’s the first time for them to branch out and live on their own while going to school. They join clubs and fraternities, participate in athletic activities and other campus entertainment and start on the path towards a future career.
Higher education is a great educational experience, but it also rather expensive. The average tuition for most four year colleges averages can easily reach five figures or more, including tuition, room and board, books and other associated costs. Some students are lucky enough to rely on family members or friends for assistance with tuition, or have enough saved up to be able to pay a good portion of those costs on their own. However, most students rely on loans to help them pay their way.
There are many different lenders that offer student loans. You can do some research online to learn more about merchant codes and other items. You can also compare loan rates at your local banks, credit unions and other lending institutions.
Here are a few things that you should know before applying for student loans:
Most student loans are either Subsidized or Unsubsidized. Subsidized loans are for students that have financial aid. The government pays the interest on these loans while the student is in school. Unsubsidized loans are available for all students, regardless of their financial situation or need. One major difference with unsubsidized loans is that students are responsible for paying back the loan plus any accumulated interest after graduation.
To apply for any kind of subsidized or unsubsidized student loans, students and their families must submit a Free Application for Federal Student Aid (FAFSA) to be eligible for consideration.
There may also be private loan options that are available. To find out if this is an option, students should visit their school’s financial aid department and ask for a list of their preferred lenders. Some of them may be able to help if federal loans are not approved for the student.
For most student loans, there is usually about a six month grace period following graduation before such loans have to be repaid. This gives graduates the time to find employment or other financing to pay back the monthly loan payments.
Some student loans can be forgiven. However, this is usually only in very rare situations. There are several requirements that must be met. Graduates usually need to be working in the public sector with non-profit or government organizations or serve in other public service capacities such as teaching or law enforcement. The lender may also be able to provide further information about federal programs that can help with student loan forgiveness requests.
Most people never want to file for bankruptcy. When they do, they should know that student loans can not be included in them. Student loans are with the borrower until they are paid off. If you stop making payments on your student loan, the federal government has the right to taking funds from your employment wages in order to cover the debt.
If you have several loans out at the same time and want a lower overall monthly payment, you may consider consolidation or refinancing. Consolidation is the act of combining all existing loans into one monthly payment with an interest rate that is the average of all of these loans. Refinancing creates a new loan to pay off your existing loans. This new loan usually has a lower interest rate.
These are both options to think about, but talk to your lender so that you fully understand the terms and conditions before signing any loan paperwork. Both options can help you get out from under debt faster, depending on your individual needs.
When applying for student loans, a good rule of thumb is to not borrow more than what your annual starting salary will be once you graduate. You can do some research into the different career fields you are thinking of entering to determine an average first year salary to use as a guideline. Borrowing more than you can realistically handle can put you into debt sooner and for a longer period of time than most people would like.
These are just some of the many factors to consider if you’re contemplating taking out a student loan. They can be great for covering the bulk of your higher education costs, but pay close attention to the terms, interest rates and monthly payment amounts and due dates. Make sure that all payments are either paid on time or ahead of time. If they are not, you could be subject to late fees, interest or other additional costs. Student loans can turn the dreams of becoming a successful professional reality for many young adults around the world.