What You Should Know About College Loans (Before You Take One)

Out of all of the loans that you’re likely to take throughout your life, few of them are going to have financial implications quite as far-reaching as a student loan. If you need to pay your way to college, it may be the best means available to you, but you should know what you’re getting into, as well as the options available to you, before you sign on the dotted line.

Understanding Federal Student Loans

Often, the first choice that students consider, simply because they’re the most readily available, programs such as the Direct Subsidized and Unsubsidized Loans are available, with the FAFSA application used to determine which you might be eligible for. One major advantage is that repayment usually doesn’t begin until after graduation, giving students time to focus on their studies. Federal loans also come with protections such as income-driven repayment plans and loan forgiveness programs for certain careers. However, it’s important to consider how much you really need to borrow, as even the most manageable loans can be a long-term financial responsibility.

Checking Out Your Private Loan Options

In addition to federal student loans, students can also access private loans offered by various institutions such as banks, credit unions, and online lenders. While you’re not likely to get cheaper loan terms no matter where you look, and, indeed, sometimes private loans can have stricter repayment guidelines, they are a great option for covering expenses that federal programs typically do not provide. The right private graduate student loans can help you ensure that you have enough to see you through your college life. This is especially helpful for those who are heading into a high-paying career and are less likely to have issues staying within the repayment terms.

Knowing How Much You Need

Every dollar that you borrow with your student loan has to be repaid, with interest. As such, you want to make sure that you don’t borrow any more than you need to. However, if you borrow too little, then you can find yourself running out of funds partway through your college stay, forcing you to scramble to find more funding. Carefully calculate your actual expenses, including tuition, fees, books, and necessary living costs, before accepting loan offers. Where possible, reduce how much you have to borrow by applying for scholarships and grants, as well.

Covering Your General Expenses

Loans are often thought of as covering your tuition and major education costs, but you also have your day-to-day expenses to cover, too. While there are credit cards and other borrowing options, your student loan should cover general expenses, too. It’s a much better deal in terms of repayment. If your rely on short-term borrowing, you might end up having to use your student loan to pay off debts while you’re still in college, which is not ideal.

Choose your student loan with care and ensure that you budget carefully to make the best use of it possible. Hopefully, the tips above help you get the most financially responsible start to your college career possible.