Before taking out a student loan, there are several things to take into consideration. For some, a student loan is the only way to afford a college education. Whether it's a private or a federal loan, financial aid can take the stress out of paying for an education. But before you submit your application, here are seven things to consider before taking out a student loan.
1. There Are Other Ways to Pay for Higher Education
Before taking out a student loan, realize that there are other ways to pay for college. Student loans are convenient, but you’ll also graduate with a ton of debt and it can take up to 10 years to repay your lender. However, if you apply for scholarships or grants, you don't have to repay this aid. Start searching for alternative options early and speak with your school counselor to see which programs you’re eligible for.
2. There is No Credit Check with Federal Aid
You might hesitate before applying for a student loan because you don't have a credit history or because you have bad credit. However, if you get a student loan through the federal government, there is no credit check. You can have no credit, bad credit, or good credit – it doesn't matter.
3. Borrow Only What You Need for School
If you're only planning to attend school part-time, don't accept a loan based on full-time status. Sure, this can put cash in your pocket, and you can use the surplus to pay for books and living expenses, but it ultimately adds to your final student loan debt.
4. Consider Getting a Part-time Job
To keep your student loan amount to a minimum, consider working part-time while attending school. This way, you can cover some of your expenses with your job, and use a student loan to make up the difference. This can greatly reduce how much you owe after graduation and help pay off your student loan balance sooner.
5. Know the Loan Terms and Conditions
Not all student loans are created equally. Therefore, make sure you fully understand the loan terms before signing your documents. You need to be familiar with all terms and conditions. For example, how much will you owe? When does repayment start? Can you qualify for student loan forgiveness in the future?
6. Make Interest Payments While in School
If you're unable to pay your way through college and need a student loan, make interest payments while in school. Student loan repayment does not begin until six to nine months after graduation. However, interest will accumulate throughout the duration of your college career. If you make in school interest payments, this reduces how much you owe.
7. Not All Private Loans Defer Repayment
When you apply for a federal student loan, repayment doesn't start until after graduation. This provision is also available with some private loans offered through banks and credit unions, but not all financial institutions defer repayment. Therefore, make sure you understand the terms when applying for private aid.
At the end of the day, a student loan can be the ticket to a college education and your dream career. Just make sure you know what you're getting yourself into before getting this money. What are other things to consider before getting a student loan?